Up to 26% of the British adult population are ‘very worried’ about changes to the cost of living over the next six months, according to a recent poll by YouGov, and nearly half, or 48%, are ‘fairly worried.’
According to a different YouGov poll, as many as 32% of adult respondents said they expect to be relatively comfortable financially in six months from now, while the same proportion predicted they would not have enough money for luxuries, but would be able to live comfortably and cover the essentials.
The cost of living is set to bite over the next few months, as energy prices continue to rise, inflation persists, and interest rates across the board increase as a result.
Mortgage rates are steadily rising across the UK lending industry and, according to Moneyfacts, every average fixed rate rose last week, including two-year fixes, which increased by 5 basis points (bps), and three-year fixes which also rose by 5 bps. Standard variable rates are on an upward trajectory as well.
Xpress Mortgages mortgage and protection advisor Carmen Green tells Mortgage Strategy: “Although we always recommend clients leave a buffer in their budget for inflation or increases to the cost of living, in reality, most budgets are already stretched in order to get onto the property ladder in the first place.”
“Sharp rises in living costs can be worrying , especially for first-time buyers who are still adjusting to the responsibilities and costs of being a homeowner,” she adds.
Recent figures from UK Finance suggest that while the number of homeowners in arrears on their mortgage continued to decline over the fourth quarter of last year, those with more significant arrears had risen.
According to the trade body, there were 30,010 mortgage holders with significant arrears at the end of last year, up 350 compared to the previous quarter.
Elsewhere, Santander reported its customers had overpaid £335m on their mortgages so far in 2022, totalling more than £47.5m a week, but brokers expect this figure to fall, as the cost of living is set to increase over the course of the year.
“With rising food and fuel prices, along with the double whammy of interest rate rises, it is understandable that people are worrying. Without wages rising at the same rate, people are going to struggle, and current government intervention does not amount to much help at all,” Shaw Financial Services owner, Lewis Shaw, tells Mortgage Strategy.
“Inflation levels are not limited to the UK and are the result of global market forces over which we have very little sway,” he adds. “Sadly there is nowhere to turn for those with smaller incomes. More government help is needed to prevent a disaster turning into a crisis.”
