Which? is warning that households across the country could be heading for even more financial pressures in January – as 1.9 million households missed payments in the lead up to Christmas.
According to the latest findings from Which?’s Consumer Insight tracker, an estimated 1.9 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill payment in the last month.
Missed payment rates generally tend to be lower in the lead up to the festive period and peak in January – when many households need to pay back their Christmas expenses as well as their usual household bills.
Which? research this time last year showed an estimated 1.7 million households missing at least one payment – but that number shot up to 2.5 million in January 2022.
Which? is concerned that these figures could repeat themselves again in the coming weeks, with many households in an even weaker position to cope with the combined pressures of Christmas and the cost of living crisis.
In the last month, Which? found that renters were more likely to miss a housing payment (6.4%), than mortgage holders (2.5%). Of those surveyed, 3.1 per cent reported having missed a loan or credit card payment and 4.6 per cent reported having missed a bill payment.
The most common type of bill missed was energy, at 2.3 per cent of households, followed by council tax (1.9%), phone (1.6%) and broadband (1.4%).
Just under six in 10 (56%) people made at least one financial adjustment – such as cutting back on essentials, selling items or dipping into savings – in the last month to cover essential spending. This equates to an estimated 15.8 million households.
This is a significant increase on the four in 10 (42%) seen this time last year, but lower than the peak of two-thirds (65%) making adjustments in September 2022.
With the UK heading into recession, mortgages and rent costs rising and the energy price guarantee becoming less generous from April, consumers will only face further financial pressures in 2023. Which? is concerned that millions of households could be facing a financial crunch in the New Year as they struggle both with outstanding Christmas payments and the rising cost of living.
If consumers are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.
With energy bill support due to be reduced from April, the government must ensure that people are not left struggling to make ends meet. The government must also urgently work with energy firms to identify and resolve issues that are currently preventing customers on traditional prepayment meters from getting the support they need.
Which? has also launched a campaign calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help consumers struggling to make ends meet. For example, energy firms must ensure that their customer service departments are bolstered in order to be able to deal with high levels of queries and provide the urgent support that many customers will sadly need.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“With 1.9 million households missing important payments in the run up to Christmas, we’re worried that many more people could be facing financial crisis in January – as the credit repayments pile up and the cost of living crisis continues to bite.
“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and broadband providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”
Notes to editors
Which? cost of living campaign
The consumer champion is launching 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.
Which? advice if you’re struggling to pay your bills
Start by contacting your energy provider. They should not just disconnect people and can help customers find a payment plan they can afford, and may be able to refer you to additional hardship funds. If people have a traditional prepayment meter and cannot afford to top it up, they should contact their energy supplier for help to keep their supply going. They may be able to access emergency credit – though you will eventually need to repay this through a payment plan. Do make sure you’re cashing in the Energy Bill Support Scheme vouchers for £67 a month payable to all households this winter. More information here.
If households are struggling to afford their mortgage, they should speak to their lender as soon as possible. Lenders should be understanding if income levels have changed – for example, because someone has lost their job – and may offer a payment holiday, extending the term to lower the monthly payment or a temporary switch to interest-only repayments. Renters should speak to their landlords about their situation and ask if they are able to offer temporary help. More information here.
For credit cards, consider moving your debts to a balance transfer credit card with a long interest-free period. You’ll still need to make minimum repayments during that time. More information here.
Consumer Insight Tracker
The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.
The survey indicates that between 54 per cent and 59 per cent of households made an adjustment to cover essential spending in the last month, with an average estimate of 56 per cent.
Based on the survey and the ONS estimate for the number of households in 2020 of 28.1m, Which? estimates that between 15.2 million and 16.4 million households made an adjustment to cover essential spending in the last month, with an average estimate of 15.8 million.
In December 2021, the financial adjustment estimate was between 40 per cent and 44 per cent, with an average estimate of 42 per cent. This amounted to between 11.2 and 12.3 million households, with an average estimate of 11.7 million.
The survey indicates that between 5.6 per cent and 7.8 per cent of households missed or defaulted on at least one mortgage, rent, bill or credit payment in the last month in December, with an average estimate of 6.7 per cent.
Based on the survey and the ONS estimate for the number of households in 2020 of 28.1million, Which? estimates that between 1.6 million and 2.2 million households missed a payment in the last month in December, with an average estimate of 1.9 million.
In December 2021, the missed payment estimate was between 5.1 per cent and 7.1 per cent, with an average estimate of 6.1 per cent. This amounted to between 1.4 and 2 million households, with an average estimate of 1.7 million.
Figure 1: 6.7% of households had missed a payment in the last month in December 2022
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: Nearly six in ten households made at least one adjustment to cover essential spending in the last month
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.
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