"4.2 million people said they cannot imagine a time when they will not be paying their mortgage"
A new report from L&C Mortgages has revealed that 1.4 million UK households are struggling to pay their mortgage and 2.6 million people think their monthly mortgage payments are too high – but are they on the right deal?
According to the findings, 58% have never remortgaged for a better deal, as highlighted in L&C’s ongoing campaign to get homeowners to save as much as they possibly can by shopping around. In an aim to combat worries about being able to cover monthly payments, 2.5 million admitted they have been forced to make significant cutbacks to reduce their spending in order to afford their mortgage payments.
The news comes as cash strapped consumers are already having to cope with rising food and energy bills, and a hike in the cost of living generally. In fact, many are ‘just about managing’ to live.
A lifetime of paying?
Another shocking find is that 4.2 million people said they cannot imagine a time when they will not be paying their mortgage, further highlighting that people feel overwhelmed by their monthly payments and cannot see a light at the end of the tunnel.
L&C’s data shows that on top of worrying about the cost of their mortgage, the nation has an average debt of £10,048 across overdrafts, student loans and on credit cards. This number rises to an average of £12,992 when looking at those aged between 18 and 34, which could present a real problem for those trying to get a first foot on the property ladder.
And worryingly L&C also revealed that over a third (36%) of homeowners are still on a Standard Variable Rate mortgage (SVR). Not only are these rates typically higher but if interest rates rise, the 4 million5 people who are on SVR mortgages could see their payments go up even more. This research also highlights that 1.1 million6 households are wasting £2.78billion7 by sitting on the wrong mortgage deal.
David Hollingworth from L&C Mortgages said: “The fact that people have been making cuts in order to cover mortgage payments indicates how people feel they are ‘just about managing’ in many aspects of their lives.
We know that British households last year ran down their savings to a record low* and that the cost of basics such as energy and the weekly shop are continuing to rise – so it’s no wonder that people are feeling the pressure when it comes to their monthly mortgage payments. The problem is that although people feel they are struggling, they are not taking steps to manage their mortgage. Our research has found that millions are sitting on the wrong deal, even though seeking advice could potentially save consumers some hard earned cash by getting a better deal - and even enable them to pay off their mortgage more quickly”.
A light at the end of the tunnel?
L&C also looked at the average time it would take people to pay off the existing balance on their mortgage across the UK. The research found that despite homeowners feeling as though they’ll be paying their mortgage off forever, the end could actually be in sight for many. The average household expects to pay off their current mortgage in 13 years. In fact, when looking at the data across the different regions, the outlook is positive, with half of the UK potentially paying off their mortgage in just over a decade. Unsurprisingly, Londoners are looking at the longest amount of time left to repay, with the research finding that on average people in the capital are looking at a 16 year remaining term until their mortgage is paid off.
Hollingworth concluded: “It is really important that people keep on top of their mortgage and take control of their monthly payments by using the current low in mortgage rates to their advantage. It is always worth seeking advice to make sure you are on the best deal and see if there is anything that can be done to relieve the stress of managing high payments. Always ask – could I be on a better deal?”