Almost one in 10 (9 per cent) households are in arrears, research from Hargreaves Lansdown has revealed.
Hargreaves Lansdown's Savings & Resilience Barometer, found this rises to 27 per cent of household among the lowest fifth of earners.
Hargreaves Lansdown head of personal finance, Sarah Coles, gave insight into how much mortgage repayments cost households, pointing out they average £814 for those who have a mortgage.
She added, for those who have remortgaged while rates have been so high, the pain has been particularly difficult to bear.
By the end of this year, one in four people with mortgages will be at risk of running into mortgage difficulties, according to the barometer, because their repayments make up more than a quarter of their disposable income.
“At that stage, 340,000 households will be ‘high risk’ because in addition to hefty mortgage repayments they don’t have enough savings to cover at least three months’ worth of essential spending,” she added.
“390,00 will be at ‘critical risk’ because in addition to both these things, they have unsustainable levels of spending.”
Debt
The barometer also reported these mortgage repayments were on top of the £406 the average household spends on monthly debt repayments excluding their mortgage.
“The relentless rise of price means our budgets are stretched further than ever, debts have been building, and they’ve become a real issue,” Coles explained.
“Higher interest rates have been putting the squeeze on millions of families, and aren’t going anywhere fast at the moment.
“It means a toxic combination of pressures pushing up debt repayments - leaving us with an even tougher job to make ends meet.”
Given this environment, Coles stated it is “hardly surprising” that one in five people are concerned about their debt position, and an increasing number of people on lower incomes are falling into arrears.
“We repaid a massive chunk of our debts during the lockdowns, but over time, they have gradually been rising.”
tom.dunstan@ft.com
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