Quarter of mortgage holders use credit to pay for borrowing

Quarter of mortgage holders use credit to pay for borrowing

In the last three months, 23% of UK mortgage holders have taken that decision, while one in six (16%) have made the move to keep up with their bill payments.

This rate is higher than for those who rent or have other living arrangements, StepChange’s study finds.

The number of households struggling to keep up with the cost of living was also highlighted in the latest UK Finance data on arrears and repossessions.

In the first quarter of 2024, 96,580 homeowners were in arrears by 2.5% or more of their outstanding balance. This is a rise of 3% on the previous three-month period.

Meanwhile, from September to December last year, 870 homeowners with a mortgage had their home repossessed, a rise of over a third (36%) on the previous quarter.

Following today’s (9 May) announcement from the Bank of England that the base rate will remain at 5.25%, the debt charity has raised concerns about how some mortgage holders will cope.

Step Change has warned mortgage holders that those coming to the end of their fixed term deal might pay almost double on their new offer.


‘Homeowners facing payment shock’

Richard Lane, chief client officer at StepChange, said: “Most of the people currently seeking our help are tenants, but homeowners facing payment shock at the end of expiring deals are often the clients facing the most sudden, acute cliff edges of unaffordable cost hikes.

“There are still hundreds of thousands of people set to face this kind of payment shock this year – the problem hasn’t yet gone away.”

Lane also urged the Government to extend its help through the mortgage charter scheme, which includes measures such as a higher threshold for borrowers to be removed from their homes.

This charter is due for a review at the end of June, and Lane alerted homeowners who may be struggling to seek help.

He added: “In the meantime, any homeowner struggling to keep on top of bills should know that help is available.

“Not only are mortgage lenders duty-bound to try to help, but services like StepChange can help you look at your finances in the round, not just your mortgage, and advise on solutions to help you achieve an affordable and sustainable budget.”

Bank of England base rate pause is ‘welcome news for borrowers across the country’ – industry reaction

Bank of England base rate pause is ‘welcome news for borrowers across the country’ – industry reaction

The Bank’s Monetary Policy Committee (MPC) voted by a 6-3 majority to maintain the base rate at 5.25 per cent. Three members preferred to increase it by 0.25 percentage points to 5.5 per cent.


The end of rate rises?

The move was widely predicted, but experts now suggest that the base rate may finally have peaked.

David Hollingworth, associate director at L&C Mortgages said, “With another hold decision, borrowers will now be hopeful that they have seen the last of rising rates. Of course, we will need to avoid any more nasty surprises and see inflation continue to fall but the mortgage market has already shown much greater stability.”

Ben Thompson, deputy CEO at Mortgage Advice Bureau agreed with that assessment.

He said: “Today’s hold in interest rates is good news for those with mortgage deals expiring soon, and prospective buyers looking to get onto the property ladder. Another hold is likely a sign that the Bank of England has now concluded this cycle of interest rate hikes. But we mustn’t get complacent.”

And Rightmove’s mortgage expert Matt Smith felt that borrowers could feel ‘reassured’ by the hold and look to delve back into the market once more.

He said: “A second consecutive pause is a good indicator that the base rate has reached its peak, which will be reassuring to those looking to take out a mortgage soon.”


No cuts in near future

However, the majority of experts were in agreement that a second month of stability did not mean that the central bank was likely to start cutting rates anytime soon.

Steve Seal, CEO of Bluestone Mortgages, said: “Today’s decision to hold interest rates is welcome news for borrowers across the country. Though rates have somewhat stalled, they are still at a historic high and it looks unlikely that there will be any cuts on the near horizon. Without a doubt, affordability will remain the key challenge for would-be and existing borrowers across the country.

And Rob Clifford, chief executive of mortgage and protection network, Stonebridge believes that the industry will have to wait for over a year before we see any reductions.

He said: “We must be mindful that holding base rate does not mean a cut will follow anytime soon. A common view is that this could stay at today’s level until the early part of 2025, even if – as anticipated – inflation does fall further. We are all in a new higher rate environment that we need to get used to.”


What does this mean for borrowers?

According to the latest figures from UK Finance (December 2022), an estimated 800,000 fixed rate mortgage deals (out of 6.8 million holders) are set to mature in the second half of this year and more than 770,000 borrowers are currently on their lender’s standard variable rate while 639,000 are on a variable tracker rate.

With that in mind, borrowers may be hoping that a second pause could lead to better rates in the near future but views were mixed on the direction of travel . While some experts offered hope, others were sceptical, and in some cases, they were downright pessimistic about the eventuality of reduced rates.

Thompson said: “The mortgage market has already seen drops in the swap rates used to calculate mortgage prices, and there is hope that a second consecutive pause might mean more reductions ahead for homeowners. Prospective buyers and mortgage customers will be relieved by the prospect of a steady rate, and hopefully not too distant reductions in the base rate.”

Rightmove’s Smith was in agreement.

He said: “We’ve now seen the arrival of a sub- five per cent, five-year fixed rate mortgage in the important 85 per cent loan-to-value bracket – the deposit size we see for many first-time buyers and home-movers. After today’s news, we can expect mortgage rates to continue to edge downwards”.

Others were not so sure.

Chris Flower, chartered financial planner at Quilter, said: “For current and prospective homeowners, a further hold on interest rates will offer somewhat of a mixed bag. Those on variable rate mortgages will not see an immediate increase in their monthly payments, and the stability will provide further reprieve for borrowers.

“For those looking to remortgage or take out a new mortgage, lenders appear to be remaining very strict with their criteria. Though fixed rates have lowered slightly, new borrowers or those looking to switch may not yet see significant reductions, but things are beginning to move in the right direction.”

Meanwhile, Alastair Douglas, CEO of TotallyMoney, said some homeowners haven’t yet felt the brunt of the previous hikes, and “will be in for a shock when their fixed rate deal comes to an end”.

He said: “Mortgage defaults are already rising at the fastest pace since 2009, and if you’re struggling to keep up with payments, then get in touch with your lender as soon as possible. The Financial Conduct Authority has ordered banks to put their customers’ needs first, and this means you could move to reduced monthly payments or extend the term of your deal.”


It’s good to talk

Above all, experts noted that, despite the better base rate news, borrowers should seek out advice from brokers before diving back into the market.

Tony Hall, head of business development, at Saffron for Intermediaries said: “Despite these signs of positivity, borrowers should still seek advice in order to navigate this complex market. Many customers will still be facing challenging financial situations, and the threat of payment shocks remain significant as they adapt to the new interest rate environment. Financial advisors can assist clients as they sail through these final choppy waters towards shore, helping customers find the best options available to them and ensuring they can fulfil their homeowning dreams.”

And John Phillips, CEO of Spicerhaart and Just Mortgages noted that brokers needed to be proactive with their clients and ensure that they were making the right decisions.

He said: “With the expectation that rates will stay higher for longer, brokers must throw their arms around clients and educate them about the tools available to help make the numbers work and support borrowers of all backgrounds.

Tough times today point to a brighter future in the mortgage market – Morrall

Tough times today point to a brighter future in the mortgage market – Morrall

So, what does the current market look like? The Bank of England Monetary Policy Committee sets monetary policy to meet the 2 per cent inflation target in order to help sustain growth and employment. While inflation has already reduced significantly from the double-digit level of late 2022, it currently sits at 6.7 per cent overall, or 6.2 per cent excluding food and energy, and the Bank of England says it expects inflation to drop significantly during the remainder of 2023.

Despite holding firm this month, financial markets are still forecasting that UK base rate could peak at around 5.75% or possibly 6% by the end of 2023 or early 2024, before falling to around 4.5% by 2025-26.

Which borrowers are being turned away from high street lenders?

As I recently reported before the summer, it was young borrowers who are finding it difficult to get mortgages. In most recent years of benign interest rates, we will recall that it was LTV (Loan to Value) ratios that was the challenge to borrowers, in other words having a sufficient deposit to meet the lenders LTV requirements. Today, it is no longer the LTV that is the challenge but meeting the lender’s “affordability” checks, given the increasingly high interest rate environment, which has already seen UK base rate increase from 0.1 per cent last year to the current level of 5.25 per cent.

Not only young first-time buyers, it is also property landlords that are impacted, although arguably to a lesser degree with rental demand for properties becoming so strong, due to lenders having re-evaluated their affordability criteria, i.e. stress rates affordability thresholds, in some cases to over 7 per cent or even 8 per cent.

What is the consequence?

It is now increasingly difficult to comply with Lender’s DSR (Debt Service Ratio) requirements to meet their affordability checks and a solution amongst high street lenders has been to extend the mortgage term. Historically, this was usually 25 years or less whereas, in some instances, we are now seeing terms of up to 40 years commonly being used to reduce monthly outgoings to more affordable levels.

Off the high street, here at Standard Chartered Private Bank, it is usual that clients maintain significant Assets Under Management (AUM) with us. As a result, our affordability checks will take the client’s net worth as well as liquidity with us into account, which in turn enables us to provide tailored credit solutions to help navigate the currently very difficult market conditions.

What is the conclusion?

Liquid borrowers and/or cash buyers are seeing the current shape of the market as an opportunity to buy properties, particularly those that are unexpectedly coming to the market. As I also recently reported, these sales transaction will create tomorrow’s valuation comparables and, consequently, we cannot expect any early pick-up in property prices. However, as inflation gets under control, and we tiptoe ever closer towards the next UK General Election, so interest rates will soften and so the UK mortgage market will open up once again.

Bank of England holds base rate at 5.25 per cent. Is this the last of the hikes?

Bank of England holds base rate at 5.25 per cent. Is this the last of the hikes?

The Bank’s Monetary Policy Committee (MPC) voted by a 5-4 majority to maintain the base rate at 5.25 per cent. Four members preferred to increase it by 0.25 percentage points to 5.5 per cent.

The decision was based on forecasts suggesting that CPI inflation was expected to return to the 2% target by Q2 2025, and following yesterday’s latest inflation data showing a fall from 7.9 per cent in June to 6.7 per cent in August – 0.4 percentage points below the MPC’s expectations given last month.

However, the MPC noted risks that modal inflation forecasts were “skewed to the upside”, reflecting the possibility that the second-round effects of external cost shocks on inflation in wages and domestic prices may take longer to unwind than they did to emerge.

The MPC report stated: “CPI inflation is expected to fall significantly further in the near term, reflecting lower annual energy inflation, despite the renewed upward pressure from oil prices, and further declines in food and core goods price inflation. Services price inflation, however, is projected to remain elevated in the near term, with some potential month-to-month volatility.”

Indeed, annual private sector regular average weekly earnings growth increased to 8.1 per cent in the three months to July which is 0.8 percentage points above its August projection.

It added that spot oil prices have risen significantly, and UK GDP is estimated to have declined by 0.5 per cent in July. Elsewhere, there have been some further signs of a loosening in the labour market with a small rise in unemployment, although the market remains tight by historical standards.

What does this mean for borrowers?

Sarah Pennells, consumer finance specialist at Royal London, said: “After consecutive interest rate rises, this is a welcome pause for borrowers. Those on a tracker rate for their mortgage will doubtless be relieved that they will not see another rise in their repayment amounts.

“However, today’s decision by the Bank of England to leave the base rate at 5.25 per cent won’t help people whose current fixed rate mortgage is near its end, as they’re likely moving off a rate that was cheaper than the new fixed rate deals available. For some, these higher repayment amounts will be unaffordable or a huge stretch on their finances.”

Katie Brain, banking expert at business information and ratings firm Defaqto, noted that mortgage deals have become cheaper recently, with some fixed rate mortgage products falling below 5 per cent.

She noted that today, the best two-year fixed rate for a remortgage at 75 per cent LTV is 5.74 per cent with a £490 fee (First Direct) compared to the best rate on 1 September of 6.14 per cent with no fee.

The best five-year fixed rate is 4.99 per cent although there is a £1,495 fee (Yorkshire Building Society) compared to 5.23 per cent on 1 September with a fee of £1,395.

Meanwhile, Andrew Gall, head of savings and economics at the Building Societies Association, said for first-time buyers, the higher cost of a mortgage compared to two years ago, alongside the increased prices for energy, food and other items, “will have a considerable impact on what they can borrow”.

Gall said: “They may need to lower their ambitions about the property they would like to buy as they are unlikely to be able to borrow at the level they might have achieved before the Bank Rate started to rise in December 2021.”

Leeds BS’ gross lending pegged at £1.9bn with FTBs nearly half of new mortgages

Leeds BS’ gross lending pegged at £1.9bn with FTBs nearly half of new mortgages

According to the lender’s latest results, its market share for gross lending came to 1.62 per cent.

It continued that the period included six out of the 10 biggest days of lending in the mutual’s history and June was its busiest month ever for shared ownership lending.

The firm added that almost half of its new borrowers were first-time buyers, equal to 7,700 out of 15,800 new mortgage members.

Arrears for the period were broadly stable at 0.63 per cent, compared to 0.62 per cent in the first half of the year, which the lender said showed that “borrowers remain resilient”.

It added that it continued to stress test for affordability at “prudent levels to lend responsibly”.

Leeds Building Society’s profit for the period came to £89.2m, which compares to £112.6m in the same period last year.

The lender added that there were 79,300 new members joined the mutual, taking total membership a to a new record of 878,800.


Leeds: ‘Actively lending in a fast-changing market’

Richard Fearon (pictured), Leeds Building Society’s chief executive officer, said that it had carried on lending across all market sectors and offered competitive savings accounts “during a sustained period of economic volatility”.

He added that he was proud of its continued support for affordable housing and the high number of first-time buyers it had supported.

Fearon added: “As a business created to empower greater home ownership, we’ve stayed actively lending in a fast-changing market throughout 2023 and since March have accepted earlier applications for product transfers, giving existing borrowers six months before maturity to choose their new deal.

“We’ve moderated the impact of repeated Bank of England base rate rises by limiting increases in our standard variable rate and have worked hard to support borrowers facing financial difficulties with help tailored to their individual circumstances.”

He continued that the firm had continued to invest in “member value, technology which improves service, and in our fantastic people – their dedication and commitment to the society’s purpose gives me confidence for the future, however challenging times may be”.

“We’ve been there for our members during tumultuous external events throughout our long history and our financial strength and security means we’ll continue to support them,” Fearon noted.

Stop dwelling on the past and deal with the mortgage market we have today – Cox

Stop dwelling on the past and deal with the mortgage market we have today – Cox

A quick Google search reveals this, or perhaps a variation on this, was first found in a 1959 novel entitled, ‘The Tents of Wickedness’ by Peter De Vries.  

The reason I write this is I have a feeling that summer 2023 has morphed not so much into ‘The Summer of Love’, but ‘The Summer of Nostalgia’, as we wrap ourselves up again in a world that no longer exists, but which felt like a better time. 

How else might we explain the incredible music of Summer 2023 being Elton John at Glastonbury, Pulp at Finsbury Park, Blur at Wembley, and a raft of other acts who became famous long ago working their own particular brand of magic around the gigs and festivals of the UK. 

We embrace it because we yearn for those feelings of yesteryear. I saw a video on Twitter today of four men, in their fifties at least, two of them with their arms around each other, the other two staring into each other’s eyes, all united in bliss at Paul Weller belting out ‘That’s Entertainment’ in the pre-Blur warm-up. 

They looked like they were having the time of their lives, but I guarantee they were also thinking about the first time they heard that song on vinyl, or heard Weller sing it live, or the memories it conjures up each time it’s played. 


Dwelling in the past 

In our own way, the mortgage market – and particularly borrowers – might be currently feeling a huge dose of nostalgia right now, a yearning for what has been and gone. Not the market of a few decades ago of course, but far closer in time – a couple of years perhaps, certainly pre-mini Budget. 

Time waits for no mortgage adviser, or lender, or borrower, and I’m afraid that we can all stand around talking about what used to be the norm, or we can get on with trying to get the best outcomes for our clients in the here and now. After all, none of us is able to access the mortgage market of 2021, or any other time. 

If any sector is acutely aware of the movement of time, and how quickly the ground can shift, it is perhaps the buy-to-let one. Landlord borrowers, and there are plenty of them I might add, will be particularly au fait with the changing nature of property investment, certainly over the last decade, and these most recent rate shifts put that difference into even sharper focus. 

But, again, what can they do knowing full well what was taken away from them, and the direct impact this had on their ability to keep offering properties to the private rental sector (PRS) and stay invested? 


Weighing up the options 

Of course, they can sell up, and some are choosing to do this, picking out those unprofitable properties from their portfolios and bringing their overall level of mortgage debt on the portfolio down.  

For those with smaller portfolios it’s less easy to cover for a property which isn’t performing, or which is going to cost double in terms of mortgage payments each month, when you can’t increase rent to a level to make it sustainable or indeed viable. 

But, for many others, the adviser will still be required – perhaps more than ever. And as lenders, we can’t exist, or compete, or provide products and criteria in a market where swap rates were two or three percentage points lower, and subsequently where interest coverage ratios (ICRs) were less, because that’s not today’s market.  


Tackling the situation at hand 

However, what we can do is our best, and try to work out product options and solutions which allow landlord borrowers to clamber over that affordability hurdle, to stay invested, to keep making a profit, and lest we forget, to keep that property in the private rental sector.  

That’s what we, and many lenders, have been doing.  

Hence, you’ll have seen a growth in the number of lower rate/higher fee products, and why you’ll have seen a growth in specific green products with cheaper rates for A-C EPC level properties. We’ll continue to focus on ways we can support those borrowers who want to make those energy-efficiencies in order to keep the energy bills down for their tenants, and to make their properties as attractive as possible.  

This is our reality, it’s the one facing advisers and their buy-to-let clients today, and it’s the one we have to work in, in order to find these landlord borrowers the product solutions that keep them offering property in the here and now.  

It’s not what it once was, but then again nothing is. 

Seven million mortgage holders struggling to keep up with household bills – StepChange

Seven million mortgage holders struggling to keep up with household bills – StepChange

A survey complied by the StepChange Debt Charity revealed that 45 per cent of mortgage payers, or 6.9 million adults are facing an uphill battle to make ends meet.

Overall, 40 per cent of mortgage holders are showing at least one sign of financial pressure, while one in ten of those with mortgages are estimated to be in problem debt.

The news that the Bank of England has elected to raise the base rate by half a point to five per cent, the highest that it has been for 15 years, will come as a further significant blow to household finances.

As the interest rate peak has almost certainly not been hit yet, with inflation remaining high and ‘sticky’ at 8.7 per cent in the year to May, more pressure on finances can be expected.

Mortgage holders are also more likely to be showing the signs of financial strain than is experienced by the wider population in the UK.

It was found that a fifth of mortgage holders have probably made just the minimum repayments on their debts, compared to 16 per cent across the UK population.

And 15 per cent of mortgage holders are also more likely to have turned to credit, loans or overdrafts to make it through to payday, in contrast to an estimate of 10% of adults by the charity.

Sharp increase in cost of borrowing to blame

Vikki Brownridge, the CEO at StepChange Debt Charity, said: “In a short space of time, StepChange’s mortgage advice team has seen a sharp rise in the cost of borrowing among clients, who are facing, on average, an approximate £300 jump in monthly payments for a typical-sized mortgage now compared to before September 2022.”

“While our figures show that increased pressure is not yet bringing more homeowners to debt advice, the risk is there as people cut back on spending or turn to credit to keep up with essentials and the wider cost of living.

“The government and lenders must be attuned to this issue with millions of people due to experience eye-watering rises in their monthly mortgage payments.

“The FCA has renewed its guidance to lenders to treat borrowers fairly, and we would urge all firms to proactively engage with and support customers showing signs of financial difficulty early, as well as providing effective signposting to free debt advice.”

“If you’re worried about meeting your mortgage payments, it’s never too soon to get support – speak to your lender about your options or seek free and impartial debt advice from a charity like StepChange.”

“We have a dedicated free mortgage advice service, which is open to anyone, whether they are currently in problem debt or not.”

Over 12,000 households using SMI loans

Over 12,000 households using SMI loans

According to the latest statistics from the Department for Work and Pensions, in the last quarter there were 12,444 SMI loans in payment.

This means that there has been a payment record of SMI at some point in the previous three-month period.

SMI is a loan to help pay the interest on a mortgage or other home loan for borrowers on certain benefits.

It will help pay interest on up to £200,000 of a loan or mortgage subject to certain conditions. The interest rate used to calculate SMI is 2.09 per cent and the interest added to the loan is 1.4 per cent.

The loan is repaid with interest when a property is sold or if you’ve transferred ownership of your home.

The majority were recorded in North West at 1,841, followed by South East at 1,448 and London at 1,376.

The total amount of SMI loans in payment is slightly down on the previous quarter, which came to 12,845.

It is also down on the same periods in from 2019 to 2021, which came to 16,280, 15,249 and 14,184 respectively.

The DWP figures revealed that the SMI loan cumulative caseload, which shows the number of households who have received an SMI loan since April 2018 (when SMI became a loan) to the end of the reporting quarter, was 24,048 in the latest quarter.

The number has been steadily growing over the past few years, going from 19,881 for the same period in 2019 to 21,936 in 2020.

It hit 22,829 in the same quarter in 2021.

In the Autumn, Budget Chancellor Jeremy Hunt cut the wait period for SMI from nine months to three months in a bid to support mortgage borrowers.

He also abolished the zero earnings rule so claimants can receive support while in work and on Universal Credit.

At the time, Hunt said that the measures would come into force in the Spring of this year.

SVR cap would not impact wider mortgage market – UK Mortgage Prisoners

SVR cap would not impact wider mortgage market – UK Mortgage Prisoners

In a written response to a question posed by shadow defence minister Chris Evans, Glen said that an SVR cap would “undermine the principle of risk-based pricing”. He added that the SVRs on closed books and active books were in-line.

Rachel Neale, lead campaigner for UK Mortgage Prisoners, said the comparison between the SVRs on closed books with those on the active market were not appropriate.

“The issue is those in closed books cannot access fixed rate products available in the active market, so only to compare mortgage prisoner rates with active SVRs is not appropriate. We are not in an ‘active market’ and a cap on closed books would not impact the wider market as claimed.”

Last year, UK Mortgage Prisoners said a guarantee scheme similar to that used for first-time buyers should be used if SVR caps were voted down in government.

Neale said Glen has made “empty promises” to look at other solutions since April 2021 and had come up with zero solutions in that time period, nor had he responded to those solutions suggested by UK Mortgage Prisoners and others.

She added that interest-only borrowing was “perfectly acceptable” and promoted by brokers and lenders pre-financial crisis. She said customers were often misled with promises of switching from an interest-only mortgage after a short fixed period “without any care by the lenders or brokers to have repayment vehicles in place”.

Neale noted that changes to affordability regulation were then made, meaning loans were sold off to non-lending entities.

“John Glen continues to blame the victims rather than resolve the issue which was not created by the borrowers,” she added.

Neale said: “Our members are overwhelmed by a cost-of-living crisis and interest rate rises, we live crisis within crisis after over a decade of unfair treatment.

“There is a tsunami of repossessions on the horizon with almost one million pre-crash interest-only loans maturing over the next decade. It is high time victim blaming and repeated feeble excuses were left behind by the government and replaced with action.”

FCA and Moneyhelper service urge struggling borrowers to seek help

FCA and Moneyhelper service urge struggling borrowers to seek help

Research carried out by the FCA and the government’s free money advice service website revealed that many people who were struggling financially were not seeking support because they were embarrassed.

The FCA said 42 per cent of struggling borrowers who ignored their lenders’ attempt to contact them had done so because they felt ashamed.

Two out of five people, 40 per cent, who were struggling financially, incorrectly thought simply talking to a debt adviser would have a negative impact on their credit file.

The regulator said its research showed that those who sought advice found it helpful; eight out of 10 people in financial difficulty who had received debt advice would recommend it, while 70 per cent said it had been more helpful than they had anticipated.

More than half, 52 per cent of borrowers in financial difficulty waited more than a month before seeking help, and of these 53 per cent regretted not doing so sooner.

The FCA and MoneyHelper are urging consumers to contact their lender if they are struggling to make their payments. The FCA said it had reminded lenders of the need to provide customers with help and support that took into account their individual needs and circumstances if they are struggling with their payments.

Borrowers are also being urged to contact MoneyHelper if they are worried about their finances. The government-backed service can help people find a way forward whether it is living on a squeezed income, working out how to prioritise bills and payments, or access to free, expert debt advice.

The FCA and MoneyHelper published tips for those who find themselves in financial difficulty including talking about money, prioritising debts and making a budget. They also urged people to make sure they shop around for the best rate before taking out any new borrowing.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Anyone can find themselves in financial difficulty, and the rising cost of living means more people will struggle to make ends meet.  If you’re struggling financially the most important thing is to speak to someone. If you’re worried about keeping up with payments, talk to your lender as soon as possible, as they could offer affordable options to pay back what is owed.”

Caroline Siarkiewicz, chief executive of the Money and Pensions Service said: “Talking about money is more important than ever and makes many realise that they are far from alone. Taking the first step in talking about money problems can be the hardest to take but in doing so can help those get the support they need to find a way forward.

“Our MoneyHelper website provides guidance on maximising your income as well as practical help on how to talk to creditors. For those who are already struggling to keep on top of bills and financial commitments, we suggest seeking free debt advice immediately. The Debt Advice Locator Tool on the MoneyHelper website can help you find a suitable debt adviser.”

Karen Noye, mortgage expert at Quilter: “It is never too late for borrowers seek help but getting help early on can stop you spiralling into a serious situation. Lenders have lots of options available to those struggling and it’s important to let them know how significant your financial difficulties are so they can decide how best to help.”