UK homeowners with mental health problems ‘spend less on essentials to pay mortgage’ | Mortgages

Homeowners with mental health problems are more likely to have cut back on food and energy to keep on top of their mortgage payments, a charityestablished by the consumer finance champion Martin Lewis has warned.

The Money and Mental Health Policy Institute said its research indicated that as many as 1.3 million people in the UK with mental health problems were spending less on essentials – which also included medicine – in order to afford their mortgage costs, which have in many cases increased sharply after a string of interest rate rises.

The charity found that while many mortgage holders had been forced to cut spending in other areas to keep up with higher repayments, the impact had been particularly acute for the three in 10 mortgage borrowers with mental health problems.

Several hundred thousand people saw their monthly outlay rise last year when their existing mortgage deal expired and they were forced to take out a more costly loan. It is estimated that about 1.6m cheap fixed-rate deals are due to expire in 2024, and while the current home loans rate war will help to soften the blow, these borrowers still typically face a big jump in their payments.

Those with mental health problems were “significantly more likely” than those without such conditions to have taken drastic action in order to cover their mortgage costs, and were also at greater risk of falling into arrears, the charity found.

A YouGov poll of 2,150 UK adults that formed part of the research found that 30% of mortgage holders with mental health problems had cut back on essential spending to stay in the black with their mortgage, compared with 21% of people without such conditions.

They were also about twice as likely (29% compared with 15%) to have raided their savings to keep up with their home loan payments, and to have cut spending on essential maintenance and repairs to their home (27% compared with 14%).

The Money and Mental Health Policy Institute is calling on banks and building societies to identify and contact customers struggling with payments, and make support measures “more inclusive and accessible” for people with mental health problems.

It added: “With 1.6m more households rolling off fixed-rate deals and facing significant payment hikes in 2024, urgent action from lenders is needed to help more homeowners avoid distress and financial harm.”

The charity’s call coincided with a separate survey from the charity Shelter and the high street bank HSBC showing that 40% of people who pay a mortgage or rent in England – equivalent to 12 million adults – were worried their housing pressures would get worse this year.

More than half (56%) of those polled reported being kept awake at night in the last year, while 70% said they felt anxious, and about half (49%) said their housing situation had left them feeling hopeless.

A spokesperson for the banking body UK Finance said: “The financial services industry is committed to supporting all customers, and lenders work hard to make it easier for customers to disclose their needs so that they can give them the support they need.

“Lenders are ready to support anyone who is struggling with their mortgage payments, and UK Finance’s Reach Out campaign was launched to raise awareness of the help available. We would encourage anyone worried about their finances to get in contact with their lender to discuss the support available.”