Millions fear missing January’s rent or mortgage payments, says Shelter

Posted: 06/01/2015 11:55:46

More than 3m households in Britain fear missing their rent or mortgage payments this month, Shelter has said, adding that an interest rate rise would put many more in trouble.

Research from the housing and homelessness charity shows that almost 60% of people say they are struggling to meet their housing costs. One in nine fear they will be unable to meet January’s payments, as families struggle to balance their budgets after Christmas.

Shelter says “sky high housing costs” mean more people risk being swamped by their mortgage or rent demands.

“Many people have spent a long time thinking they have nowhere to turn and are often close to breaking point by the time they come to us. If you’re in this situation, it’s so important to remember you’re not alone and that help is available,” said Shelter’s helpline adviser, Nadeem Khan.

The number of visitors to its website seeking advice on eviction, repossession and rent and mortgage arrears has spiked in recent months, suggesting the problem is becoming more acute, a spokesperson said.

Shelter urged people to get in contact if they need help to avoid eviction.

“I spoke to a lady recently who was sick with worry for months because she couldn’t meet her mortgage payments and felt too ashamed to ask for help,” Khan said. “When finally a court notice landed on her doorstep she came to us and we were able to help the family keep their home.”

Evictions hit a record high of more than 100 a day in the autumn. Bailiffs repossessed more than 11,000 rented properties between July and September, the highest quarterly figure since records began in 2000, and 2,805 mortgage borrowers lost their homes during the quarter.

The bedroom tax has been blamed for driving the increase in evictions, by cutting the amount of housing benefit paid to social housing tenants whose homes are deemed too large for their requirements.

UK interest rates are likely to remain at their current record lows for some months, but a rise in borrowing costs could push more overstretched households into financial trouble.

Another survey found that a third of borrowers would struggle to meet repayments if they increased by between £100 and £199 a month.

“Our latest mortgage mood data suggests that many borrowers are not ready for an interest rate rise,” said Jeremy Duncombe, the director of Legal & General Mortgage Club. “The last time rates went up in the UK was in 2007, and although the base rate has been static at 0.5% for over five years, they will rise sooner rather than later.”

According to the Money Advice Service, a one percentage point increase in interest rates would add £90 a month to the cost of repaying a £180,000 mortgage. A rise of two points, taking the Bank of England’s base rate to 2.5%, would add almost £200 a month to the average repayment.

The Bank of England has repeatedly said it would raise interest rates gradually when the time comes. It has also indicated that borrowing costs will remain low until there are signs that real wages are rising

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