The Bank of England’s announcement of a 0.25 percentage points rate rise today brings the base rate to 4.25%. StepChange Debt Charity warns that the continued pressure built up by high interest rates, coupled with soaring inflation, spells danger for the millions of mortgage holders on variable rates, those whose fixed rate deals are nearing an end, and tenants who face rent rises as a result.
StepChange’s latest client data shows 17% of new clients are in arrears with their mortgage, with many more who prioritise keeping up with their mortgage falling behind on other household bills or credit commitments, leaving them vulnerable to problem debt.
Peter Tutton, Head of Policy at StepChange Debt Charity, said:
“Another rate rise, alongside this week’s news of rising inflation, is the latest in a succession of body blows to household finances. Our latest research shows half of renters and more than one in three mortgage holders expect their housing payments to rise within the next 12 months. Most worryingly, of those facing a rise, one in four expects to be driven into problem debt because of it.
“With so many households’ finances being sorely tested, it’s vital lenders treat borrowers fairly. As the FCA has recently set out, tailored support and signposting to free debt advice, alongside proactively identifying customers who may be teetering on the edge of problem debt will be needed to help those who are struggling.
“For anyone worried about rising housing costs and their ability to meet financial commitments, the most important thing is to reach out for help as early as possible. Don’t wait to contact your lender or speak to a reputable free debt advice charity like StepChange. We are here to support you.”
Notes to Editors
Minutes of the Bank of England’s March Monetary Policy Committee meeting