The latest English Housing Survey from the Office for National Statistics (ONS) revealed the proportion of homeowners using their savings for mortgage payments was lower than private renters at 29 per cent and social renters at 23 per cent.
While owner occupiers were less likely to dip into their reserves, the figures suggested mortgage arrears had increased on pre-pandemic levels. Some two per cent of mortgagors were in arrears during April and May, higher than the 0.5 per cent proportion before the health crisis.
It was also a rise on the one per cent who were behind on payments in November and December. However, it was lower than the six per cent recorded during June and July last year at a previous survey.
In addition, a tenth of mortgagors reported that they had been finding it difficult to keep up with payments over the last year.
Of those either in arrears or finding it hard to keep up with payments, two-fifths said they had been struggling more since November and December last year. However, this was lower than the 64 per cent who reported it was more difficult to keep up with payments since June and July of that year, when asked in November and December.
Reasons for falling behind or struggling with mortgage payments included being furloughed on reduced pay, working fewer hours or less overtime, unemployment and an increase in other payments.
Looking forward, three per cent of mortgagors said they expected to fall behind with their bills, similar to the four per cent who cited the same in November and December. The vast majority who were up to date with payments expected to continue paying as normal.
Asking for help
Fewer mortgage holders were seeking help during the period, with just six per cent stating they had sought advice regarding mortgage payments.
This was unchanged from November and December, but lower than the 14 per cent who asked for help in June and July.
Some three per cent of households agreed to a payment referral in April and May, down from a tenth in June and July. A further three per cent had spoken to their lender about a deferral but no agreement was made.
A tenth of households reported being behind with at least one household bill in April and May, lower than the 12 per cent saying the same in November and December.
Owner occupiers were less likely to be behind with bills with three per cent of outright owners saying so, and five per cent of those with a mortgage. Some 17 per cent of private renters admitted they were behind on at least one household bill.
Those renting in the private sector were spending 36 per cent of their income on rent in April and May, up from 32 per cent before the pandemic.
Some seven per cent were behind on the rent, unchanged from the previous survey in November and December.
The proportion of private renters saying they were finding it difficult to keep up with rent remained fairly stable on pre-pandemic levels with a quarter replying this was the case.
Prospective homeownership was affected among renters with just 45 per cent saying they expected to buy their own home. This was down from the 59 per cent who expected to be able to do so in 2019-20 and the 49 per cent who planned to do so in June and July last year.
Daniel Wiltshire, actuary and independent financial adviser at Wiltshire Wealth, said: “These findings are concerning enough, but with inflation forecast to rise above four per cent by the end of the year and the cost of borrowing also expected to increase, household finances are set to be squeezed even further. There are sadly tough times ahead.”
Robert Payne, director at Langley House Mortgages, added: “These are concerning statistics that show an unsustainable pattern of financial behaviour amongst some. If these trends carry on then we are heading towards a large number of defaults, which is bad news for everyone.
“It is unclear why this is happening but if it is linked to the impact of Covid-19 then we are potentially only witnessing the tip of the iceberg, with extremely worrying times ahead of us.”