According to a survey of more than 2,000 adults conducted by The Mortgage Lender (TML), the pandemic has put a strain on household finances with four our of every 100 adults believed to have missed multiple payments over the last two years.
TML’s research also found that a tenth of people planning to buy a property within the next year had missed a payment in the past two years.
Young adults were among those most likely to have experienced financial difficulty, as 11 per cent of 18-34-year-olds had missed at least one usual payment in the past two years. This was nearly four times the amount of over-55s, at three per cent, who missed payments.
TML said it was concerned that prospective homebuyers were those most likely to have accrued adverse credit recently, with 10 per cent, admitting to having missed one or more payments in the past two years, putting them at risk of having a mortgage application rejected.
Across all adults who admitted to missing a payment, the average number of payments missed was three, with 31 per cent missing five or more.
The most common missed payment was a credit card payment, which accounted for 45 per cent of all missed payments. The next most common missed payment, at 40 per cent, was a utility bill, followed 27 per cent, missing a council tax bill, 25 per cent missing rent payments and 23 per cent missing personal loan repayments. Missed mortgage payments accounted for seven per cent of missed payments.
Mortgage industry needs to help
Peter Beaumont, chief executive of The Mortgage Lender, said: “It’s nearly two years since the onset of Covid-19 and the true picture of the financial difficulty faced by some people is coming into sharp focus.
“With greater clarity on household’s credit history during this period, we’re now seeing the potential dangers to people’s financial futures too. The past two years have impacted many people’s jobs and salaries, putting a squeeze on household finances, and now with the rising cost of living due to high inflation and energy costs there is even greater pressure on the nation’s finances.
“In such a volatile economic climate, it’s important that more people are prevented from falling down a rabbit hole of financial difficulty. The lending market needs to become better equipped to deal with the greater quantities of people who are emerging from the pandemic with adverse credit histories. Rather than penalising people for the consequences of an unprecedented event, the industry should be working together to support those who’ve missed payments so that people, especially aspiring homeowners, aren’t locked out of the market.”