Missed payments among mortgage holders back at levels seen at the height of the cost of living crisis, Which? warns

Missed payment rates among mortgage holders have returned to levels seen at the height of the cost of living crisis, Which?’s latest consumer insight tracker finds, as the Spring Budget leaves some feeling low about their future household finances. 

In the month to March 8th, 8.1 per cent of mortgage holders missed essential payments such as housing, utility bill, credit card or loan payments. This is the third highest level Which? has recorded for mortgage holders since it started tracking it in April 2020 - only slightly lower than the high of 8.5 per cent in both March 2023 and November 2023.

Missed payment rates were also high among renters - with one in seven renters (14%) missing essential payments in the month to March 8th. On the other end of the scale, households who own their home outright actually saw a decrease in missed payments to 1.6 per cent, down from 2.8 per cent in February.

It was a rise in missed utility bills and credit card or loan payments that drove the overall increase in missed payments for mortgage holders and renters - suggesting that both groups may be prioritising housing costs over other essential bills. 

For example, mortgage holders’ missed mortgage payment rate dropped by 0.2 per cent this month to 2.4 per cent, while credit card or loan missed payments rose by 2.4 per cent to 4.7 per cent and missed household bill payments rose by 2.8 per cent to 4.8 per cent. 

Overall, 2.4 million households (8.6%) missed at least one payment in the month to March 8th - a significant increase from the 1.9 million households in the previous month. This suggests that the cost of living crisis is still having a significant impact on household finances and people’s ability to cover the cost of essential bills. 

15.1 million households (54%) reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is significantly lower than the 60 per cent seen last March but higher than levels seen in 2020 and 2021.

Consumers’ confidence in their own financial situation fell this month. One in four (24%) consumers believe their household financial situation will get better over the next 12 months, while three in ten (31%) thought it will get worse - giving a net score of -8. 

Confidence in the future UK economy remained at similar levels to last month. Only one in five (21%) said they think the UK economy will get better over the next 12 months, whilst half (50%) believe it will get worse - giving a net confidence score in the future economy of -29.

The Spring Budget has left some feeling low about their future household finances and the economy. One in eight (13%) of people who gave a reason for their level of confidence mentioned policies from either the Spring Budget or the Autumn Statement.

One man from Eastern England said: “The cost of essential everyday items is still rising. Council tax is rising. I cannot get a pay rise. Although the National Insurance rate is reduced by 2 per cent, the tax-free allowance stays the same so I'm still worse off.”

However, it was more common for people to point to changes in their personal circumstances - such as pay rises - or continued increases in the cost of living as the main drivers of change for their household’s financial situation. One man from the North West said that he expects his financial situation to improve as “both myself and my wife are due pay rises in the coming months”.

With interest rates still high, consumers are likely to continue to face financial pressures throughout 2024. The next Bank of England rate decision is also due on Thursday. If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.

Which? is also calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help consumers struggling to make ends meet and ensure they are providing value for money.

Rocio Concha, Which? Director of Policy and Advocacy, said: 

“It’s very worrying that missed payment levels are still so high - with almost one in 10 mortgage holders missing a household payment in a single month. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their mortgage provider or landlord for help.

“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”

ENDS

Notes to Editors

Which? cost of living calls

The consumer champion is calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis. More information is available here.

Which? advice if you’re struggling to pay your bills

If households are struggling to afford their mortgage, they should speak to their lender as soon as possible. Lenders should be understanding if income levels have changed – for example, because someone has lost their job – and may offer a payment holiday, extending the term to lower the monthly payment or a temporary switch to interest-only repayments. Renters should speak to their landlords about their situation and ask if they are able to offer temporary help. More information here and here.

Consumer Insight Tracker

The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.

Which? estimates that between 7.3 per cent and 9.8 per cent of households missed or defaulted on a housing, bill or credit payment in the last month to March 8th, with an average estimate of 8.6  per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, this scales up to between 2.1 million and 2.8 million households missing a bill payment in the last month, with an average estimate of 2.4 million.

The survey indicates that between 51 per cent and 56 per cent of households made an adjustment to cover essential spending in the last month to March 8th, with an average estimate of 54 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, Which? estimates that between 14.5 million and 15.7 million households made an adjustment to cover essential spending in the last month, with an average estimate of 15.1 million.

You can view more consumer insight tracker data and download graphs here (please note the data dashboards will not be updated with the latest wave of data until the publication date). 

Figure 1: Missed payment rate by housing tenure

Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of households who have missed a housing, bill, loan or credit card payment in the last month.

Figure 2: Missed payment rates amongst mortgage holders

Figure 3: 8.6% of households said they had missed a payment in the month to March 8th

Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of households who have missed a housing, bill, loan or credit card payment in the last month.

Figure 4: Over half of households made at least one adjustment to cover essential spending in the last month

Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.

Figure 5: Consumer household confidence fell in the month to March 8th 

Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.