Half of all renters and a quarter of mortgage borrowers were struggling financially in January, the latest Financial Lives survey by the FCA has found.

Overall it found that 7.4m million people were struggling to pay bills and make credit repayments, down substantially from 10.9m the previous January, but still above the 5.8m recorded in February 2020 before the cost of living crisis took hold.

The survey shows that renters have been particularly badly hit, with 50% not coping financially or finding it difficult to cope, compared to 28% of the general population and 24% of mortgage borrowers.

It also found that 62% of tenants had seen their rent rise in the past year.

While 26% of renters had fallen behind on one of their bills in the previous six months, compared to 11% of the general population, only 7% had missed a rent payment, showing how tenants prioritise this above other expenses.

The 24% share of mortgage borrowers who reported struggling to cope, was down from 29% last January.

The FCA found that 1.7% had missed a mortgage payment in the previous six months compared to the 1.1% in last year’s survey.

There was an increase in the proportion of borrowers struggling financially who asked for a payment holiday or another reprieve, up from 0.4% a year ago to 1.6% in January.

As well as renters, single adults with children, adults from a minority ethnic background and people living in the north-east of England were more likely to be in financial difficulty, the FCA found.

FCA executive director of consumers and competition Sheldon Mill says: “Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the help that’s available.”

AJ Bell director of personal finance Laura Suter says: “The overall picture is improving but still incredibly tough for many households who are at the sharp end of the cost of living crisis.

“While fewer people are struggling to pay bills and fewer are falling behind with payments than a year earlier, there are still far more people who are struggling financially compared to before the current crisis.

“The figures paint a truly divided picture.”

The FCA has also confirmed it is making permanent the expectations on lenders to support borrowers in difficulty, which were introduced during the pandemic.