StepChange Debt Charity says the Bank of England’s announcement today of a further base rate rise from 4.25% to 4.5% is another blow for household finances. The charity warns this could be a further catalyst for problem debt among mortgage holders nearing the end of fixed-rate deals, or for private renters whose landlords have passed on higher debt servicing costs.
At present, around one in seven mortgage holders (15%) who seek help from StepChange are in arrears on their mortgage, while arrears on other household bills such as gas and electricity remain alarmingly high among all StepChange clients.
Responding to the latest rate rise, Vikki Brownridge, Chief Executive of StepChange Debt Charity, said:
“The steep jump in interest rates we’ve seen over the past 12 months has been a shock to household budgets, compounding financial difficulty for people who are already struggling to make ends meet. As time goes on, more mortgage holders will be facing the prospect of a new fixed rate deal or variable rate which will consume a larger proportion of their income, making it increasingly difficult to meet other financial commitments.
“The situation is becoming increasingly precarious for many people and widespread problem debt is a risk, particularly for financially vulnerable households. We would urge firms to be proactive in identifying and communicating with customers who might be falling into difficulty by offering tailored support and signposting to free debt advice.
“For anyone worried about housing costs and their ability to cover payments, it’s important to reach out for help as early as possible, whether that’s through contacting their lender, or a free debt advice charity like StepChange.”