Recent research has revealed that the younger members of the population and more specifically, millenials, are more likely to miss a payment on their mortgage or rent, compared to Generation X. The findings come from a survey conducted by prepaid card providers, icount, to learn more about the impact of rent and mortgage arrears in the UK.
Over 1000 people took part in the survey, and of the respondents aged between 25 and 34 years old, 13.3% had missed a payment on their mortgage or rent within the last 12 months, whereas only 2.8% of the respondents aged 55+ had missed a mortgage or rent payment within the same period. This highlights the impact that rising mortgage and rental costs across the UK are having on the younger members of the population.
The survey also revealed the main reasons why people are struggling to keep up with rent and mortgage payments. The top 5 reasons were:
- General living costs
- Benefits payment gap
- Unexpected bills
- Changing jobs
- Prioritising other debts
Inflation in the UK has continued to rise over the last six years, giving rise to ‘cost-of-living crisis’ and higher costs for food, clothing and petrol. The findings from the survey suggest that this has had a serious impact on the wider population, and many people are struggling to keep up with rent and mortgage payments as a result.
Samuel Mond, the MD of icount, had this to say about the survey findings:
“The survey data highlights that the number of missed payments is rising across all age groups. This shows the importance of improved education in all areas of budgeting and personal finance.
“Whilst Universal Credit is cited as one of the main factors for the increase in arrears over the last 12 months, it’s interesting to note that unexpected bills and general living costs are strong contributors to these missed mortgage and rent payments in the UK.”
The changes in the conditions of the wider economic climate are difficult to predict, and this will always have an impact on our personal finances in some way or another. However, there are steps that can be taken to improve money management and prevent getting into mortgage and rent arrears. Read on to learn how.
Switch to a different mortgage lender
Many mortgage lenders only offer fixed rates for a few years, after which the rate goes up or switches to a variable rate. This means that you could end up paying significantly more in interest when your fixed-rate period ends.
Switching to a new lender with a lower interest rate can help you to reduce your monthly outgoings and reduce your risk of getting into mortgage arrears.
Sell your house
Whilst this may seem like a drastic option, it can help to reduce your monthly mortgage payments significantly – thus, helping you to avoid getting mortgage arrears in the future.
If you’re considering this option, it’s important to account for any early repayment charges on your mortgage and the cost of moving house too.
Try to reduce your living expenses
Most people have some areas where they could cut back in their daily lives, however, they can be difficult to spot. Even the small things can add up to a lot of money, therefore it’s a good idea to look at your overall monthly outgoings and see what is not needed.
Cutting back on expensive habits such as smoking, drinking and eating out can help you to better manage your finances and reduce your chances of falling behind on mortgage and rent payments.
No matter what your age or background, there’s always a possibility that you could be affected by mortgage or rent arrears at some point in the future, and this can have serious consequences such as losing your possessions or home. Actively taking steps to improve your money management and budgeting skills can help to improve your financial situation and reduce this risk.