Millions more Britons are struggling to meet bill and credit repayments compared to a year ago, according to official figures that highlight the impact of rising costs on UK households.
According to regulator the Financial Conduct Authority’s (FCA) ‘Financial Lives’ survey, around 10.9m people in the UK are currently struggling to make repayments, up from 7.8m in May 2022. The number of people who missed loan or bill payments in at least three months out of the last six months has risen from 4.2m to 5.6m over the same period.
Worrying about mortgage or rent payments, soaring energy bills and other steep household costs is also taking a huge toll on people’s mental health. According to the FCA, around half of UK adults (28.4m people) felt more anxious or stressed in January this year than they were last summer as a result of rising living costs. If you’re anxious about your finances and don’t know where to turn for help, read our article Are money worries affecting your mental health?
The FCA predicts that around 356,000 mortgage borrowers may be struggling to meet repayments by June 2024 as living costs rise. If you’re struggling to meet rising mortgage payments in particular, read more in our articles What can you do if you can’t pay your mortgage and Can I remortgage if I’m struggling financially?
The FCA has reminded lenders that they should make efforts to help borrowers who are struggling to meet repayments, and consider ways to make payments more affordable. In November 2022, the regulator announced that seven lenders would pay £12m in compensation following failings in the way they treated customers struggling to meet mortgage repayments during the pandemic.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Our research highlights the real impact the rising cost of living is having on people’s ability to keep up with their bills, although we are pleased to see that people have been accessing help and advice.
“We will continue to act quickly to make sure financial firms help their customers who are facing financial difficulty or are worried they might be soon.”
Bernie Hickman, CEO at Legal & General Retail, said: “New data released today by the FCA has found that the number of people struggling to meet bills and credit repayments has risen by 3.1m since May 2022.
“Household costs have increased significantly, and this has made people across the country especially vulnerable to financial shocks should the worst happen, and facing struggles to meet their regular monthly payments.”
The FCA’s new Consumer Duty regulations come into force in July, which include ‘principles’ aimed at ensuring companies take steps to treat customers fairly.
Britons are being squeezed by rising interest rates and rampant inflation. The cost of living, or inflation, is expected to continue rising at a faster pace than the government’s 2% inflation target until 2025, according to the Bank of England. Meanwhile, interest rates rose to 4.5% in May in the twelfth consecutive increase since December 2021. Read more in our article Interest rates jump to 4.5%: how to manage rising rates?
Laura Suter, head of personal finance at investment platform AJ Bell, said: “For many people missing payments on their mortgage or not meeting a credit card payment, that could drag them further into debt. More than a million people are due to remortgage on to higher rates before the end of the year, leaving many with a price shock they can’t afford.”
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.