Missed payments at alarmingly high levels months into 2023, Which? finds
Millions of households are struggling to get their finances back on track after the post-festive crunch as the number of missed payments on mortgages, utility bills and other essential spending remains stubbornly high, according to Which?’s Consumer Insight Tracker.
January is usually the month where the highest number of households tend to miss or default on housing, bill, loan or credit card payments, as people face a reckoning over the cost of Christmas. Usually, this figure is lower in February and March as people get their finances under control – however this year it has stayed worryingly high.
An estimated 2.5 million households (8.8%) missed or defaulted on a payment in March, compared to the 8.2% and 8.1% seen in January and February respectively, Which?’s latest Consumer Insight Tracker report found.
It is rare for the rate to stay so high for multiple months. With the exception of December, the rate has remained at around or above eight per cent since September 2022.
Which?’s research comes days before painful increases to many household bills across energy, broadband and mobile, water and council tax. With millions of people already struggling, the findings underline the need for the government and companies in essential sectors to support the most financially vulnerable.
When it came to making adjustments to manage cost of living pressures, six in ten (60%) households surveyed in March 2023 reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is consistent with the level seen for the past few months.
The adjustment rate increased drastically in the first few months of 2022, going from four in 10 (42%) in December 2021 to six in 10 (59%) just four months later, in April 2022. Since then, it has remained at around this level, varying between 56% and 65%.
In more positive news, Which?’s latest consumer insight research found that, although pressure on household finances is high, consumer confidence appears to be recovering slightly.
A fifth (21%) of consumers said they think the UK economy will get better over the next 12 months, whilst 54 per cent said they think it will get worse, giving a net confidence in the future economy of -33. This is a significant improvement on the -68 seen six months ago, but still below the levels (-17) seen just before the pandemic.
The government keeping the Energy Price Guarantee at £2,500 and removing the pre-payment meter penalty in the short-term are important steps in the right direction which will offer a much-needed lifeline to households that continue to be battered by high inflation, but further action is needed.
Which? is calling on essential businesses – such as supermarkets, energy and telecoms providers – to ensure that they step up and help people as much as possible during the cost of living crisis.
For consumers struggling to make payments, there is support available. For payments like mortgages or rent, it is important to talk to lenders or landlords in the first instance, as they may be able to help with a plan to make the costs more manageable.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research suggests millions of households are struggling to get their finances on track amid huge pressure on the cost of living. This should set off alarm bells, particularly as painful increases to many essential bills are due to take effect in a matter of days.
“Our findings underline the need for the government and companies in essential sectors – such as supermarkets, energy and telecoms providers – to do everything in their power to support consumers, particularly those struggling financially, through this incredibly difficult time.”
-ENDS-
Notes to editors
-
Which? cost of living help: www.which.co.uk/topic/cost-of-
living -
Which? cost of living campaign
The consumer champion has launched a campaign calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis. More information on the campaign is available here.
-
The fieldwork was conducted by Yonder on behalf of Which? between 10th and 12th March 2023. A sample of 2,063 consumers was surveyed online and weighted to be nationally representative.
-
The proportion of households who had missed a housing, bill, loan or credit card payment in the last month was at 8.8% in March. This is a slight but not statistically significant increase on the 8.2% and 8.1% seen in January and February, respectively.
-
Based on the survey and the ONS estimate for the number of households in 2021 of 28.1 million, Which? estimates that between 7.6 per cent and 10 per cent of households missed or defaulted on at least one mortgage, rent, bill or credit payment in the last month, with an average estimate of 8.8 per cent. This amounts to between 2.1 million and 2.8 million households, with an average estimate of 2.5 million.
Case studies from Consumer Insight Tracker – January 2023
A 51-year-old man from the south east of England said: “It is a struggle to pay bills and afford food. There is no money for anything but the essentials and sometimes not even enough for those. This is making me miserable all the time and making my mental health even worse.”
A 40-year-old woman from Scotland said: “I am anxious about the future and struggling to pay upcoming bills.”
A 73-year-old woman from Northern Ireland said she was: “Finding it difficult to heat the home, buy food and pay bills.”
A 49-year-old man from the south west of England said: “I’m finding that I am spending more than I have incoming. I’ve had to put some bills on hold and have had to cut my spending on groceries. I’m also borrowing from family from time to time.”
Figure 1: 8.8% of households said they had missed a payment in the last month in March 2023
Interactive version: https://infogram.com/
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of households who have missed a housing, bill, loan or credit card payment in the last month.
Figure 2: Six in ten households made at least one adjustment to cover essential spending in the last month
Interactive version: https://infogram.com/
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.
Figure 3: Consumer confidence picked up somewhat in March
Interactive version: https://infogram.com/
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
About Which?
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.
The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at endorsementscheme@which.co.uk.
Press Release