Millions of families are struggling to pay their mortgages or rent and have fallen into arrears in the last six months, a new study has revealed.
Despite improving economic conditions and household finances, as many as 8 million people have rent or mortgage arrears of up to three months, according to the Debt Advisory Centre.
The research showed that 15% of homeowners and tenants had borrowed money to pay for their housing costs in the past year.
Three out of ten of the 2,000 people questioned said they are struggling to make ends meet, while a fifth said they feel worse-off now compared to a year ago.
There was some reprieve for those in debt yesterday when the Bank of England decided to keep the interest rate at 0.5%, although the Bank hinted that rates could rise by 2017.
Once rates start to rise, this will hit Britons in the pocket as they will have to spend an increasing proportion of their incomes on interest payments. Unless wages match the pace of interest rate change, families could struggle even more with their finances.
Rents across England and Wales hit £816 per month in September, the highest level on record, according to research from estate agents Your Move and Reeds Rains.
Average rents rose 1.6% between August and September, well above the inflation rate which is still hovering around zero.
With rents increasing 6.3% from £768, the rise means tenants now need to find around £48 more a month to pay their rent
Melanie Taylor from the Debt Advisory Centre, said: “There is an alarming number of people who are struggling to pay for the basics from their regular incomes and so are being forced into a cycle of borrowing.
“The last thing we want consumers to do is to pay for their essential bills, such as their mortgage or a gas bill, using credit. The first step out of this cycle is to do a workable budget, which prioritises household bills, and then to be ruthless in sticking to it.
“If anyone finds that their income isn’t stretching to meet their bills, then I would urge them not to borrow money, but instead to seek advice from the Money Advice Service or elsewhere. For people with problem debt, don’t ignore it. It’s important to get support before the debt starts to spiral.”
