Interest rate rises again – what to do if you’re struggling with mortgage or rent payments
The Bank of England has today voted to increase its interest rate from 4% to 4.25%. Today's rise marks the 11th consecutive hike, with the bank upping the rate at every opportunity since December 2021.
If you’re a homeowner with a variable mortgage rate or a fixed-rate deal that is due to come to an end this could well mean you’ll be looking at increased monthly payments. And even if you’re a private tenant, you might find your landlord tries to pass on rising costs to you. So what should you do if you’re struggling to make your mortgage or rent payments?
If you’re struggling with mortgage payments
Financial Conduct Authority (FCA) figures suggest another 356,000 households will fall behind with their mortgage payments by the end of June next year, with those coming off a fixed-rate deal looking at an incredible average increase of £340 a month.
However, the FCA has reassured borrowers they are not alone. Sheldon Mills from the FCA said: ‘Your lender has a rage of tools available to help. Get in touch as soon as you have concerns, don’t wait until you’re about to miss a payment before doing so. Just talking to them about your options won’t affect your credit rating.’
Recent guidance for lenders from the FCA confirms that firms are expected to support customers in financial difficulty. It states that lenders need to consider a range of options for helping people struggling, including offering a period of reduced monthly payments or extending the term of their mortgage.
So the first step if you’re worried about making your mortgage payments is always to speak to your lender to see how they can help. You can find more information in our guide on what you should do if you fall behind with your mortgage payments.
If you’re struggling to pay your rent
The rent prices paid by private tenants in the UK rose by 4% in the 12 months to November 2022. As a tenant, it’s important to know your rights to avoid being exploited. In most circumstances, your landlord can only increase your rent once a year and that increase has to be a reasonable amount. You can find more information on your rights and what to do if you’re struggling to pay on the government website.
There are also ideas on how to make savings in other areas and information on the support that’s available if money worries are affecting your mental health in our blog on how to manage rising rents and mortgage interest rates.
A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.
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