Tag: Christmas crisis

Which? warns of Christmas mortgage crisis

Half a million mortgage-holders are facing an imminent financial shock as their fixed deals end in the run-up to Christmas or January, the most expensive time of the year for many consumers, Which? is warning.

Figures from regulator the Financial Conduct Authority (FCA) show that around 500,000 fixed-rate mortgages will come to an end in November, December or January.

As a result of higher interest rates, most affected homeowners moving onto new deals will have to pay hundreds of pounds more each month compared to their previous deal.

Data from Moneyfacts shows that the market-leading two-year fixed-rate mortgage is currently 5.53%, from Coventry Building Society. Earlier this year, the average rate for this type of mortgage went above 6%, yet those who fixed their deal in December 2021 could have got rates below 2%.

The average mortgage holder has £147,000 left to pay off, according to the FCA. In September 2021, someone taking out a two-year fix with 20 years left on their loan would, on average, have paid £770 a month.

However, someone in that same scenario today would be paying £1,106 a month – a £336 difference, which equates to £4,032 extra annually.Data from the FCA also suggests another spike in mortgage deals coming to an end next Spring, with over 180,000 homeowners set to come off fixed-term rates in April.

With average rates for both two and five-year mortgage deals hovering around 6% and many experts predicting the fifteenth successive Bank of England rate rise tomorrow, it is unlikely that homeowners whose deals are ending in the coming months will be able to find deals at anywhere near the rate they have been previously paying.

Mortgage holders can generally lock in a rate up to six months before their current deal expires, and can pull out of that deal should they find a better rate elsewhere. Homeowners whose fixed deals are expiring by the end of the year should be looking at new deals and how they will affect their finances now.

The consumer champion is calling on banks to ensure they are ready to provide appropriate support to customers. That means firms are ensuring that their customer service support – via phone calls, email and chat support – is properly staffed and resourced, including during the Christmas holiday period.

Those concerned about their ability to make mortgage repayments should contact their lender in the first instance – and doing so will not affect their credit score. Support could include a temporary mortgage holiday, temporarily paying only the interest on the mortgage (and not the capital repayment), or extending the term of your mortgage. The most suitable option will depend on individual circumstances, so it is crucial that lenders are offering tailored support.

Mortgage holders whose fixed-rate deals are coming to an end in April should be able to search for and lock in a competitive rate soon. The FCA’s new Consumer Duty, which holds firms in financial services to higher standards of customer service, should mean that customers are supported in a way that meets their financial needs. Companies that fail to do so should expect to face tough action from the regulator.

Ele Clark, Senior Money Editor at Which?, said: “The rock-bottom interest rates homeowners enjoyed for more than a decade are firmly behind us, and those who need to remortgage are feeling the full force of the last two years’ worth of rate rises. 

“With around half a million mortgage-holders’ fixed-rate deals coming to an end in the next few months, it’s vital that lenders are offering adequate and fully resourced customer support to help borrowers assess their options. 

“Under the new Consumer Duty, firms must support their customers throughout the term of their mortgage. If they don’t, we’d expect them to face tough action from the regulator.”

The Leith Collective launches its winter coat exchange ahead of ‘Christmas crisis’ predictions

Locals urged to donate to those struggling with the cost of living

The soaring cost of living, continuing high inflation and mounting energy bills will culminate in a ‘Christmas crisis’, predicts The Leith Collective. The Edinburgh Community Interest Company has been helping locals via a range of free clothing exchange initiatives throughout 2023, but says the coming season will likely be their toughest challenge yet.

First launched in January 2022, The Leith Collective’s winter coat exchange proved instantly popular, with more than 7,000 good quality coats donated and rehomed over the course of the year. But whilst many had hoped spiralling everyday expenses would settle in 2023, sadly the cost of living has continued to climb. According to The Leith Collective, the result of this is an even bigger number of Edinburgh residents now facing breaking point.

In response, The Leith Collective is now on a mission to distribute more coats than ever before and is appealing to local residents as well as businesses with excess old stock to donate what they can.

Speaking ahead of the launch of the 2023 winter coat exchange, founder Sara Thomson said; “We’ve had countless people telling us that last winter was unbearable. We all hoped that things would change for the better in 2023, but sadly it’s been cut back after cut back, price rise after price rise this year.

“For those people that had hoped to ‘ride out the storm’ last winter, the realisation that things have not improved since then and their struggles are likely to continue into 2024 will hit them hard this Christmas. 

“A warm and comfortable winter coat is a basic necessity, especially now that we’re seeing more and more extreme weather as a result of climate change. But for families that have been continually stretched, a coat yet another essential item that they are having to sacrifice.

“From our experience, the culminative effect of all these ongoing sacrifices can have a hugely detrimental impact on a person’s dignity and on their mental wellbeing.”

The winter coat exchange launches in all three Leith Collective stores on Sunday 1st October. Locals and businesses are being urged to donate good quality winter coats and waterproof jackets suitable for all ages and sizes. The coats will be available for anyone to collect at Ocean Terminal, Fort Kinnaird and St Enoch Centre completely free of charge, no questions asked. 

The winter coat exchange is not only a practical response to the cost of living crisis, but also to the climate crisis – a cause which lies at the heart of The Leith Collective. The winter coat exchange is a sustainable solution that aims to keep quality clothes out of landfill and in use for longer, thus promoting a circular economy and helping to reduce the environmental impact of the textile industry.

As a Community Interest Company, all profits from The Leith Collective go towards supporting the community and promoting sustainability through the arts.

The Leith Collective actively supports individuals with mental health or support needs to grow in confidence and gain experience in the workplace, and offers business mentorship to any members of the Collective.

It is hoped that by hosting the winter coat exchange in accessible locations such as Ocean Terminal, Fort Kinnaird and St Enoch Centre, those currently experiencing difficulties will be able to receive a helping hand.

Coats can be dropped off or collected at The Leith Collective at Ocean Terminal, The Leith Collective at Fort Kinnaird, and The Clydeside Collective at St Enoch Centre during opening hours.