One in four mortgage borrowers fear losing their homes due to unpaid bills

7 Nov 2022

New poll reveals homeowners expect their mortgage bills to rise and are worried about losing their home, defaulting on a payment or cutting down on food bills
Liberal Democrat Leader Ed Davey has called for a Mortgage Protection Fund, to offer grants to struggling homeowners who risk financial ruin whilst interest rates soar

New polling commissioned by the Liberal Democrats has found over one in four mortgage holders (27%) are worried about losing their home due to unpaid bills as interest rates rise. Almost half of mortgage holders (47%) are even worried about cutting down on their food bill as payments spiral in the wake of Liz Truss’s budget last month.

Overall, seven in ten (71%) of those with a mortgage say they expect to pay more in housing costs over the next year.

The other stark findings from the new polling amongst mortgage holders also reveals:

34% are worried about defaulting on a payment
47% are worried about cutting down on their food bill
31% are worried about needing to borrow from a friend or family member
26% are worried about needing to downsize to a smaller property
36% are worried about cancelling a DIY project to cover a bill
37% are worried about cancelling a holiday to cover a bill

This week, the Bank of England said that the typical mortgage could rise by roughly £3,000 a year by the end of 2023.

Under new proposals announced by Liberal Democrat Leader Ed Davey, those who have seen their mortgage payments increase by more than 10% of their income could apply for grants of up to £300 a month to help cover the cost of the rise. This would protect families from falling into arrears or losing their homes because they can’t afford spiralling mortgage rates.

The estimated £3 billion cost of this Mortgage Protection Fund would be paid for through reversing Conservative cuts to the Bank Levy and Bank Surcharge since 2016.

The Liberal Democrats are also calling for measures to support renters, including bringing in the long-promised ban on “no fault” evictions and bringing in longer tenancies that protect against unfair rent hikes.

Liberal Democrat Leader Ed Davey said:

“These shocking figures reveal the true horror of this Government’s failure to manage Britain’s economy.

“The Conservative government has added hundreds of pounds to people’s monthly mortgage bills through their disastrous budget. Struggling families are being forced to pay this Conservative Property Penalty, with many worried sick about how they will get by or even afford to stay in their homes.

“The government has a responsibility to step in and fix their own mess, by providing grants to those struggling to afford eye-watering mortgage hikes. No family should face losing their home because of the Conservative party’s reckless mismanagement of the economy.

“This Mortgage Protection Fund could be paid for by reversing the Conservative party’s unfair and unnecessary tax cuts for the big banks who are making huge profits.”

ENDS

NOTES TO EDITORS

Methodology: Savanta ComRes interviewed 1,499 UK adults who pay rent or have a mortgage aged 18+ online between 14th and 16th October 2022. This includes 628 people with a mortgage. Data were weighted to be representative of the UK by age, sex, region and social grade.

Liberal Democrat Mortgage Protection Fund proposal:

Recent research by the Resolution Foundation suggests that the average annual cash increase in mortgages will be around £1,800 a year by the end of 2023 (research available here, p.4, figure 3.). Around 1.2 million households are on flexible-rate mortgages, so have already seen their monthly payments rise. [Resolution Foundation]. Another 1.8 million households will see their fixed rates come to an end in 2023, at which point their monthly payments will go up too. [UK Finance]
Under the Liberal Democrat proposals, anyone who sees their mortgage payments rise by more than 10% of their household income could apply for grants to cover the cost of that rise, paid monthly. These payments would be capped at £300 a month.
The Resolution Foundation estimates that roughly 1.8 million households would fall into that category (about 25% of all mortgaged households), and that the average annual cash increase in mortgages will be around £1,800 a year by the end of 2023.
If all eligible households were to apply for these grants, the total cost would therefore be around £3 billion in 2023-24.