To reduce costs, 16 per cent have switched from a repayment to an interest-only mortgage and 25 per cent said they were considering this.
Just over one in 10, 12 per cent, said they have lengthened their mortgage term, with 25 per cent considering this, and eight per cent said they have moved to a cheaper home, with 22 per cent considering doing this.
Some homeowners have cut back elsewhere to meet higher mortgage costs with 11 per cent reducing pension contributions and 20 per cent thinking about it, according to the latest Consumer Pulse research from KPMG.
Mortgage rates have been steadily rising following successive rate rises by the Bank of England. Yet in its latest decision it held rates, at 5.25 per cent, and mortgage costs have fallen slightly since.
‘Taking significant steps to manage these higher costs’
Linda Ellett, UK head of consumer markets for KPMG, said: “Whether it’s switching to interest-only mortgages, lengthening mortgage terms, reducing pension contributions, or selling property to move to something cheaper – this higher interest rate environment is causing between 10 to 20 per cent of mortgage holders that KPMG surveyed to take significant steps to manage these higher costs.
“Inevitably, increased household budget and savings being used to pay the mortgage, or higher rent cost, will continue to lead to less money being spent elsewhere within the economy by consumers, which will continue to challenge both retailers, brands and leisure businesses.”
Cutting back on non-essentials and switching supermarkets
Over half, 56 per cent, of the 3,000 people included in the research said they had reduced non-essential spending since the start of the year and just four per cent had increased this spending.
Top of the list for cutting back was eating out, chosen by 70 per cent, followed by takeaways and clothing, which 60 per cent had cut back on.
At the supermarket, 41 per cent of those asked said they were buying more own-brand products, a rise from 30 per cent in September 2022 while 39 per cent said they were buying more discounted items and 36 per cent said they were spending more time looking for bargains on grocery shopping. A third of people also said they had switched to a cheaper supermarket to lower costs.
It comes as many of the major supermarkets have launched loyalty schemes for customers offering cheaper prices to those who sign up. Discount supermarket Aldi was also rated as the cheapest UK shop in September, for the 15th month in a row by consumer group Which?.
A third of consumers (29 per cent) said that they have switched to cheaper shops, while one in five said they are buying more pre-owned items.
Just under a third, 27 per cent, said they were using their savings to pay for essential household costs and the most popular ‘big ticket’ item which people were using their savings towards was holidays.
Average savings pots of £8,000
The average savings pot of those asked was just under £8,000. For those aged 18 to 24, this fell to £2,747 and for those aged 65 and older, it rose to £12,543.
Over a third, 34 per cent, said they feel less financially secure now than they did at the start of 2023 and 21 per cent said they feel more financially secure now than they did at the start of the year.
Ellett added: “As 2023 has progressed we have seen the number of shoppers having to make cost savings increasing. Around 40 per cent of the consumers we survey say they are buying lower cost or promotional goods, with a third having switched to lower cost retailers. One in five say they are buying more pre-owned goods this year, which more positively could also reflect environmental drivers.
“We are also seeing consistent numbers of consumers cutting back on certain non-essential activities in order to save money – with eating out and takeaways continuing to be the most common target for cost cutting.”
