A charity founded by Martin Lewis, a consumer finance advocate, has issued a warning that individuals with mental health issues are at a higher risk of reducing their spending on food and energy in order to afford their mortgage payments.
According to the Money and Mental Health Policy Institute, their study showed that a significant number of individuals in the UK who have mental health issues are reducing their spending on necessities, such as medication, in order to cover their mortgage payments. This situation has become more challenging due to the recent rise in interest rates.
The organization discovered that a significant number of individuals with mortgages were compelled to decrease their expenses in other aspects in order to meet the increased repayments, but this had a particularly severe effect on the 30% of mortgage borrowers who also have mental health issues.
Last year, a significant number of individuals experienced an increase in their monthly expenses when their previous mortgage agreement ended and they had to obtain a more expensive loan. Approximately 1.6 million low-cost fixed-rate deals are set to end in 2024, and although the current competition among home loan rates may alleviate the impact, these borrowers can still expect a significant rise in their payments.
Individuals with mental health issues were “considerably more prone” than those without such disorders to have resorted to extreme measures in order to manage their mortgage payments. They were also at a heightened risk of falling behind on their payments, according to the findings of the charitable organization.
According to a YouGov survey of 2,150 adults in the UK, 30% of individuals with mental health issues who have mortgages have reduced their necessary expenses in order to maintain their mortgage payments. This is in contrast to only 21% of individuals without mental health conditions.
The study showed that individuals were twice as prone (29% vs 15%) to dip into their savings to make their mortgage payments, and also reduced spending on necessary home upkeep and repairs (27% vs 14%).
The Money and Mental Health Policy Institute urges banks and building societies to actively identify and reach out to customers facing payment difficulties. They also recommend making support options more inclusive and easily accessible for those with mental health issues.
The statement stated that there are 1.6 million households whose fixed-rate deals will end soon and they will face higher payments in 2024. It also emphasized the need for lenders to take immediate action to assist homeowners in avoiding financial difficulties and harm.
The charity’s request aligned with a different study conducted by the charity Shelter and the popular bank HSBC, which revealed that 40% of individuals in England who make mortgage or rent payments (equivalent to 12 million adults) are concerned that their housing struggles will worsen this year.
In the past year, a majority (56%) of the survey respondents stated they have experienced difficulty sleeping at night. Additionally, 70% reported feeling anxious, and almost half (49%) expressed hopelessness due to their current housing situation.
A representative from UK Finance, a banking organization, stated that the financial services sector is dedicated to assisting all customers. Lenders put in effort to facilitate customers in disclosing their needs in order to provide them with necessary support.
Lenders are prepared to assist individuals facing difficulties with their mortgage payments. The Reach Out campaign, initiated by UK Finance, aims to inform people about the resources and assistance that is available. We urge anyone who is concerned about their financial situation to reach out to their lender and discuss the available support options.
Source: theguardian.com
