Higher mortgage rates and increased rental costs led to approximately 700,000 UK households missing their rent or mortgage payments last month, new figures have revealed.
A survey carried out by Which? showed missed payments among renters were “particularly high,” with one in 20 renters failing to pay their bill to the landlord.
The consumer champion said: “Tenants and homeowners have been hit hard by price increases in the past year.”
With the mortgage rates soaring since September’s mini-budget, the average two-year fix jumped to 5.35% in April 2023 from 2.86% in April 2022.
This has also affected tenants, with the “buy-to-let” landlords possibly passing on the increased costs.
According to the Office for National Statistics (ONS), one in five tenants in privately rented properties experienced a 10% or more hike in their monthly rent between February 2022 and February 2023.
Amid the trend of rising rents, private tenants and mortgage holders are expected to come under increased pressure, with the Bank of England expected to increase the cost of borrowing for the 12th time in a row on Thursday.
Which? said 3.1% of mortgage holders missed payments last month, and about two million households (7.3%) “missed or defaulted” on at least one mortgage, rent, loan, credit card or bill.
While these figures are similar to those at the same time last year, they remain higher than the April 2021 (6.5%) and April 2020 (5.2%) figures.
However, they are lesser than the figures reported in March – 8.8%.
The most common type of missed payments were energy bills, followed by council tax payments.
The survey also revealed that almost six in 10 people, approximately 16.6 million households, made “at least one financial adjustment – such as cutting back on essentials, selling items or dipping into savings – in the past month to cover essential spending.”
These figures match the high adjustment level seen in April last year but are much higher than those seen two years ago.