Continued reprieve for those worried about housing costs
Commenting on today’s decision by the Bank of England to hold the base rate at 5.25 per cent, Sarah Pennells, consumer finance specialist at Royal London said:
"Today’s decision by the Bank of England to leave the base rate at 5.25 per cent will be a welcome relief for consumers who have been concerned about the rising costs of their housing repayments through most of 2023.
"Our latest Cost of Living research* shows that 80 per cent of those who own their home with a mortgage are worried about affording their repayments, which is more than double the proportion of people that felt the same way last year (34% August 2022**).
"However, our research also shows that it’s those who are renting who are most concerned about affording their rental payments, with 82 per cent worried about finding the funds to cover their rent each month, and almost a quarter of renters (24%) telling us they are extremely worried about affording their rental payments.
"When thinking about those who have been watching the savings market, although savings rates have been getting higher, with best buy easy access accounts paying over 5 per cent, they have not kept pace with the rises in the Bank of England base rate we’ve experienced. It's vital that savers shop around to find the best account to help their money work harder for them."
- If you’re nearing the end of your current fixed deal, you can start to look at your options and secure a new deal with a lender around six months in advance of the mortgage start date. If you’re concerned rates will continue to rise, it’s best to act as quickly as you can to put a new fixed rate deal in place and avoid moving onto a lender’s standard variable rate. Under the Mortgage Charter, most lenders have agreed that you will also be able to ask for a better like-for like-deal with your lender right up until your new term starts.
- Get in touch with your lender if you’re worried about being able to afford your mortgage. Contacting your mortgage lender in this way won’t have any impact on your credit score.
- It is much better to have the conversation with your lender early so they can look at available support options with you before you find yourself with any mortgage arrears. Contacting them before you miss payments means there may be more options available to you to help make your payments affordable.
- Mortgage lenders that have signed up to the Mortgage Charter have said customers who are up to date with their mortgage payments will be able to switch to interest-only payments for six months or extend their mortgage term to reduce their monthly payments. The lender won’t need to carry out an affordability check and it won’t affect the customer’s credit score. However, customers who want to go back to their original mortgage term will have to contact their lender within the six-month period.
- If you’re struggling with other household bills or you’ve received letters mentioning repossession, contact a free-to-use debt advice charity, such as StepChange, National Debtline or Citizens Advice, or the financial poverty charity, Turn2us, straight away.
- Savers should make sure that they’re making the most of their personal allowance by reviewing the rates offered on existing tax free savings accounts as there can be more attractive options out there as providers tend to offer their highest interest rates on new customer accounts.
Notes to editor
*Royal London commissioned a survey by YouGov Plc.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 4222 adults. Fieldwork was undertaken between 25th August - 10th September 2023. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
** Royal London commissioned a survey by Opinium between 26th August – 1st September 2022 with a Nat Rep sample of 4,000 UK adults.
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About Royal London
Royal London is the largest mutual life, pensions and investment company in the UK, and in the top 25 mutuals globally, with assets under management of £153 billion, 8.6 million policies in force and over 4,100 employees. Figures quoted are as at 30 June 2023. Learn more at royallondon.com.
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