Almost one in six renters missed an essential payment in a single month, Which?’s latest Consumer Insight Tracker finds, as the consumer champion calls on essential businesses to do more to support people through the cost of living crisis.
Overall, an estimated 2.4 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in the month to 12 January. This is on a par with the levels of missed payments seen throughout most of 2023, but it is a sharp rise from the estimated 1.8 million households who missed payments in the month to 8 December.
This volatility in missed payment rates around the Christmas period was also seen in previous years - possibly reflecting abnormal spending patterns over the festive period.
Missed payments were particularly high among renters – with almost one in six (15.9%) renters surveyed missing at least one rent, loan, credit card or bill payment in the month to 12 January.
A significant number of mortgage holders surveyed also missed essential payments in the month to 12 January – 6.8 per cent – as Bank of England interest rates remain high.
On the other end of the scale, just 2.8 per cent of outright owners missed an essential payment.
Worryingly, of the just over 200 Universal Credit recipients in the sample, a quarter (24%) reported having missed or defaulted on a payment.
Bills remained the most common type of payments for households to miss (5.1%), followed by loan or credit card payments (4.4%) and then housing payments (2.7%).
Of those who missed a household bill payment, the most common bill type missed was an energy bill (56%). Other commonly missed bill payments were council tax (36%), water (30%), phone (29%) and broadband and/or TV package (29%).
Six in ten (58%) households reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. This equates to an estimated 16.5 million households.
Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is slightly higher than the levels seen the previous four months (53%-56%) and the same as the 58 per cent seen last January.
Consumers’ confidence in their current household finances fell slightly this month to +13, down from +17 last month and +21 in September. Current household confidence has steadily declined throughout the cost of living crisis.
One woman from South East England said: “Everyday is stressful. We worry about money constantly. [We] rarely use the heating … We are not living, we are existing at this point. No holidays, no luxuries, just stress and worry.”
One man from Eastern England said: “It is causing major stress and depression. I have totally lost my social life.”
Another woman from the West Midlands said: “I’m cutting back on the amount of food I buy, I only have one meal a day, I don't put the heating on and I limit myself to no longer than 7 minute showers and only 3 a week.”
However, consumers’ confidence in the future of the economy and their future household situation rose slightly - with people giving the recent cuts to National Insurance and anticipated increases in their wages and State Pension as reasons for optimism. Consumer confidence in their future household situation rose from -14 last month to -6 in the month to January 12th and confidence in the future UK economy increased to -26 from -35 last month.
Despite this improved optimism about the future, these figures remain net negative, showing the majority of people still think these measures will get worse over the next 12 months. Only about one in five (22%) consumers think the UK economy will get better over the next 12 months, while almost half (48%) believe it will get worse. For future household finances, just a quarter (24%) think theirs will get better and three in 10 (30%) believe theirs will worsen.
With interest rates still high, consumers are likely to continue to face financial pressures throughout 2024. If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.
Which? is also calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help consumers struggling to make ends meet and ensure they are providing value for money.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“It’s very worrying that missed payment levels are still so high - with almost one in six renters missing an essential payment in a single month. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their landlord for help.
“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”
Notes to Editors
Which? cost of living calls
The consumer champion is calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis. More information is available here.
Which? advice if you’re struggling to pay your bills
If households are struggling to afford their mortgage, they should speak to their lender as soon as possible. Lenders should be understanding if income levels have changed – for example, because someone has lost their job – and may offer a payment holiday, extending the term to lower the monthly payment or a temporary switch to interest-only repayments. Renters should speak to their landlords about their situation and ask if they are able to offer temporary help. More information here and here.
Consumer Insight Tracker
The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.
Which? estimates that between 7.3 per cent and 9.7 per cent of households missed or defaulted on a housing, bill or credit payment in the last month to 12 January, with an average estimate of 8.5 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, this scales up to between 2.1 million and 2.7 million households missing a bill payment in the last month, with an average estimate of 2.4 million.
The survey indicates that between 56 per cent and 61 per cent of households made an adjustment to cover essential spending in the last month to 12 January, with an average estimate of 58 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, Which? estimates that between 15.9 million and 17.1 million households made an adjustment to cover essential spending in the last month, with an average estimate of 16.5 million.
You can view more consumer insight tracker data and download graphs here.
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As an expert in financial analysis and consumer behavior, I bring a wealth of knowledge and hands-on experience in interpreting economic indicators, tracking market trends, and understanding the dynamics of consumer spending. I have a strong foundation in analyzing data related to household finances, payment patterns, and economic confidence. My expertise is evident in my ability to dissect complex financial scenarios, identify key trends, and offer insights that shed light on the broader economic landscape.
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Missed Payments Statistics:
- Almost one in six renters missed an essential payment in a single month, according to Which?’s Consumer Insight Tracker.
- An estimated 2.4 million households missed or defaulted on at least one mortgage, rent, loan, credit card, or bill in the month to 12 January.
- The number of missed payments sharply rose from the previous month, reaching levels comparable to most of 2023.
Payment Volatility and Christmas Period:
- Volatility in missed payment rates is observed around the Christmas period, possibly due to abnormal spending patterns over the festive season.
Renters and Mortgage Holders:
- Renters experienced particularly high missed payment rates, with almost 16% missing at least one payment.
- Mortgage holders also faced challenges, with 6.8% missing essential payments, attributed to high Bank of England interest rates.
Universal Credit Recipients:
- Of the 200 Universal Credit recipients surveyed, 24% reported missing or defaulting on a payment.
Types of Missed Payments:
- Bills were the most commonly missed payments (5.1%), followed by loan or credit card payments (4.4%) and housing payments (2.7%).
- Energy bills were the most common type of bill missed, followed by council tax, water, phone, and broadband/TV package.
- 58% of households made adjustments to cover essential spending, such as utility bills, housing costs, groceries, school supplies, and medicines.
- Adjustments included cutting back on essentials, dipping into savings, selling possessions, or borrowing.
- Consumer confidence in current household finances declined, with a slight increase in confidence regarding the future of the economy and future household situations.
- Despite improved optimism, the majority still believe that economic measures will worsen in the next 12 months.
High-Interest Rates and Financial Pressures:
- With interest rates remaining high, consumers are expected to face continued financial pressures throughout 2024.
Which?’s Call for Action:
- Which? is urging essential businesses, including energy firms, broadband providers, and supermarkets, to do more to support consumers during the cost of living crisis.
- Rocio Concha, Which? Director of Policy and Advocacy, emphasizes the need for businesses to help customers get a good deal and avoid unnecessary costs during this challenging period.
In conclusion, the article highlights the widespread financial challenges faced by households, especially renters, and emphasizes the need for essential businesses to play a more supportive role during the ongoing cost of living crisis. The data presented underscores the economic strain on individuals and the necessity for proactive measures to alleviate financial burdens.