Tag: debt

Stressed About Debt?

CITIZENS ADVICE SCOTLAND LAUNCHES NEW CAMPAIGN

A new Citizens Advice Scotland campaign is encouraging people to seek advice if they are worried about their debts, as research shows over 660,000 people cite debt as impacting their mental health.

Analysis of polling from research company YouGov suggests around 665,148 people in Scotland have seen their mental health and wellbeing affected by debt.

The “Stressed about Debt?” campaign aims to encourage people who are worried about their bills or stressed about debt to seek advice from the Citizens Advice network.

People can go to www.cas.org.uk/stressed and pick an advice route that works for them, such as online self-help tools, online advice pages or one to one advice from their local CAB.

The CAB Service helps improve people’s financial situation and for some this includes debt write -off. Since last spring CABs have helped write off over £11 million worth of debt, with the average amount written off being over £12,600 per client.

https://youtu.be/Os-Qv09KO_0

CAS Financial Health spokesperson Sarah Jayne Dunn said: “There is a clear link between money and mental health and that will have been exacerbated by the cost-of-living crisis. 

“Hundreds of thousands of people across the country, through no fault of their own have fallen behind on bills and find themselves in debt. Some people will be in debt for the first time, others will have seen their existing debt get worse.

“There’s no shame in having debt, and it’s completely understandable to be stressed and anxious about it. For many people, debt is something they ignore until it builds up and becomes overwhelming.

“That’s why we’ve launched the Stressed about Debt campaign, to encourage people who are worried to seek advice and not let those worries build up until they are suffocating.

“You don’t need to go to a CAB to get advice, instead you can check our online advice pages or use our interactive self-help tools.

“Our network gets real results for people – last year people who saw a gain having sought advice were more than £3,700 better off. Our advice is impartial, confidential, and crucially free – we don’t charge for our advice, and we never will.”

Scottish Government Housing Minister Paul McLennan MSP said: “I welcome this important and timely campaign from Citizens Advice Scotland.

“Advice services play a critical role in helping people to navigate the current cost crisis and to access the support and information they need. The cost-of-living crisis is putting a huge strain on households which is why the Scottish Government is doing all it can to deliver support.

“This year we will invest over £12.5 million in a range of advice services providing free income maximisation, welfare and debt advice. This includes more than £4.45 million to Citizens Advice Scotland and the network of Bureaux for the Money Talk Team, which offers free confidential and holistic advice.  Access to free, confidential and impartial advice through the CAB network, either online or in person, can make a massive difference for people.”

Alex Cumming, Executive Director of Operations at SAMH (Scottish Action for Mental Health), said: “Poor mental health can be a factor in building up debt, and debt can result in mental health problems, including stress and anxiety. Debt and mental health problems often form a vicious circle, and it’s important to seek help for both.

“At SAMH, we hear time and again from the people we support, including those who contact our information service, that they are experiencing issues with money at the same time as needing help with their mental health.

“We welcome Citizens Advice Scotland’s campaign and encourage anyone who is stressed about debt to take that first step towards getting the support they need.”

As well as Citizen Advice Bureaux across the city, free and independent local debt advice is also available from a number of organisations including CHAI, Granton Information Centre and the city council’s Advice Shop.

Citizens Advice sees surge in young adults needing help with managing money as cost-of-living pressures soar

  • New research shows nine in ten (90%) under 25s feel uncomfortable discussing finances
  • “We’re here to help”: charity reveals the number of young people needing support with managing money has doubled since 2019
  • Citizens Advice to place 6m-tall elephant in Manchester city centre to address the ‘elephant in the room’ and encourage young people to talk about their money troubles

The number of young people needing help with managing money has doubled since 2019, Citizens Advice has reported. The charity, which supported 66,000 under 25s last year alone, says one in five (20%) young adults seeking its advice need help with debt.

Citizens Advice warns many young people are feeling particularly squeezed by the cost-of-living crisis as they face a triple whammy of soaring living costs, rising private rents and high inflation. The charity is helping record numbers of people amid rising financial pressures.

Despite this, the vast majority of young adults still feel uncomfortable discussing finances. According to the charity’s new research, nine in ten (90%) under 25s shy away from such conversations, and would rather talk about sensitive topics like health issues, politics or religion instead of money.

To address this ‘elephant in the room’, Citizens Advice has placed a giant 6-metre-tall inflatable elephant in Manchester city centre, aiming to create a talking point and encourage young adults to open up about their finances and seek support. 

The elephant is being displayed in Exchange Square, by Manchester Victoria Station, on Saturday 17 February to try to break the silence young people experience when it comes to talking about money and raise awareness of the support Citizens Advice can offer. Staff and volunteers from the charity will be on the ground in Manchester to help answer questions from the public and give advice and support on money troubles.

The elephant’s colourful, money-related pattern has been designed by India Buxton, a Fine Art student at the University of Salford, who was commissioned by Citizens Advice after winning its competition. 

India, who received £500 prize money, said: “It feels fantastic to win the competition. Many young people, myself included, are in the dark about finances and don’t know where to start, or who to ask for help. It can feel like an embarrassing conversation, but it’s so important to do it, and hopefully this artwork will help get people talking.”

In the Citizens Advice study, embarrassment was listed as the top reason why young adults feel uncomfortable discussing money, followed by the fear of comparison.

The top five reasons why young people feel uncomfortable talking about finances are:

  1. Feeling embarrassed of their financial situation (35%)
  2. Feeling worried how their finances compare to others (31%)
  3. It’s too personal a topic to talk about (18%)
  4. Not wanting the other person to feel uncomfortable in the conversation (15%)
  5. Not knowing enough about finances to talk about the topic confidently (12%)

Jack, 24 from Derby, is in his first graduate job after finishing university and has around £2,000 in debt, mostly due to late payments on utility and council tax bills. He would love to pay off his debts and start saving, but is currently living “pay cheque to pay cheque”, as the cost of living crisis makes it even more challenging for him to manage his money.

Jack finds conversations about money difficult, but knows that avoiding the topic isn’t helping his financial situation.

Jack says: “My finances are not in a good position, and I feel terrible about it. My debt is going down gradually, but I don’t think it’s ever going to hit zero. 

“I’d feel more comfortable talking about money if I had a clue what’s going on, but I don’t like discussing it. Even though I know that talking to people who have had similar experiences to me would probably do me the world of good, I still won’t do it, because it’s awkward and stressful. 

“I’ve actually straight-up lied to avoid talking about my financial situation. For example, I didn’t have the heart to tell my flatmate that I couldn’t afford to go halves on a rental deposit, so I talked them into a zero-deposit option, even though I knew it put us in a worse position in the long term. It made me feel like a failure.

“A massive part of the problem is the cost of living. Everyone says, ‘Make a budget plan and stick to it.’ I would, but if my bills are going up by £100 every two months, where is the extra money going to come from?

“I fully think that my financial situation has been affected by not knowing where to get good advice. If I’d just spoken to someone and explained my current situation, they might have been able to tell me what to do.”

Rosi Avis, Partnership and Communication Lead at Citizens Advice Manchester, says: “All of us can struggle to find the words when it comes to talking about our finances. And we know young people are really feeling the pinch with rising costs and sky-high rents.

“At Citizens Advice we help thousands of people find a way forward every day. So whether it’s a dodgy landlord, a retailer who’s refusing to give you a refund, or help with credit card debt, we can support you.

“The most important first step is to speak to someone about your worries: whether it’s a family member, a mate or one of our trained advisers. We’re here to help and make you feel less alone.”

To support young people to feel more comfortable discussing finances, Citizens Advice has created an expert guide here: 

https://wearecitizensadvice.org.uk/elephant-savings-your-starter-guide-to-talking-about-money-6fef0d8f4b6d

TUC: UK families suffering “worst decline” in living standards in the G7

UK is only country in G7 where household budgets have not recovered to pre-pandemic levels

  • Families would be £750 a year better off if real disposable income had grown in line with other leading economies 
  • Working people are being made poorer by Conservative failure, union body says 

The UK is suffering the worst decline in living standards of any G7 country – according to new TUC analysis published this week.

The analysis shows the UK is only G7 economy where real household disposable income per head hasn’t recovered to its pre-pandemic levels: 

Real household disposable incomes in the UK were 1.2% lower in the second quarter of 2023 than at the end of 2019. 

But over the same period they grew by 3.5%, on average, across the G7. 

The TUC estimates that if real disposable income in the UK had risen in line with the G7 average UK families would be £750 a year better off. 

More pain ahead 

The union body warned that the contraction in UK household budgets is going to get worse – despite falling inflation. 

The Office for Budget Responsibility (OBR) forecasts that real house disposable income per head in Britain will fall by an additional 3.4% by the end of the first quarter of 2024. 

And according to the same forecasts household budgets won’t even recover to their pre-pandemic levels until the end of 2026. 

The OBR said in November that UK households are suffering the worst period for living standards since modern records began in the 1950s. 

Households in debt 

The TUC says the Conservatives’ failure to grow the economy and deliver healthy wage growth has pushed many households further into debt. 

Analysis published by the union body at the end of December revealed that unsecured debt (credit cards, loans, hire purchase agreements) is set to rise by £1,400 per household, in real terms, this year. 

The TUC says working people have been left brutally exposed to rising costs after years of pay stagnation. 

UK workers are on course for two decades of lost living standards with real wages not forecast to recover to their 2008 level until 2028. 

The TUC estimates that the average worker has lost £14,800 since 2008 as a result of their pay not keeping up with pre-global financial crisis real wage trends. 

TUC General Secretary Paul Nowak said: “The UK is the only G7 nation where living standards are worse than before the pandemic. 

“While families in other countries have seen their incomes recover – household budgets here continue to shrink. 

“This is a damning indictment on the Conservatives’ economic record.  

“Their failure to deliver decent growth and living standards over the last 13 years has left millions exposed to skyrocketing bills – and is pushing many deeper into debt. 

“We can’t go on like this. Britain cannot afford the Tories for a day longer.” 

Growth in real disposable household income in the G7 

Country change 2019Q4 to 2023Q2 
United Kingdom -1.2 
Italy 0.1 
Germany 0.2 
Japan * 0.5 
France 2.4 
Canada 3.0 
G7 3.5 
United States 6.0 
source: OECD; * Japan to 2022Q1 

– The analysis is based on OECD figures for real household disposable income per head, which extend to 2023Q2 (except for Japan, which go to 2022Q1). Looking forward, UK figures are based on Office for Budget Responsibility projections in the November 2023 Economic and Fiscal Outlook. As with the ONS outturns and OBR projections, cash figures are in 2019 prices. 

– The OBR measure living standards as real household disposable income (RDHI) per person. 

Debt surge: How much are UK households saving?

Recent reports state that UK households are to face a forecasted 11% increase in credit card and loan debt in 2024, as well as warnings of a £17,600 debt surge by 2026.

In a recent study by CityIndex, UK households are saving just 3.25% of their disposable income amid the soaring cost of living crisis – a figure that is expected to change if debt levels reach their predicted peak.

The study analysed global data on household savings, including mean disposable income, mean household savings and long-term interest rates, to ultimately discover the countries with the highest household savings in the world.

Key findings:

  • UK households save an average of 3.25% of their earnings per annum.
  • Households in the United Kingdom make almost as much as those in Sweden, but they get to save three times less 
  • Switzerland leads the rating with a total savings score of 9.83/10, and the lowest mean long-term interest rates
  • Sweden stands out for lower than average long-term interest rates

The countries with the highest household savings:

 County Mean household disposable income in USD*Mean household savings in USD from disposable income*% of disposable income put toward savingsMean long-term interest ratesTotal savings score
1.Switzerland$35,311$590817%1.449.83
2.Luxembourg$40,395$30288%2.359.69
3.United States of America $42,592$29617%3.219.67
4.Chile$14,004$153211%5.199.63
5.Germany$32,997$356811%2.289.62
6.Austria$31,792$305810%2.619.55
7.Netherlands $31,304$24758%2.479.51
8.France$29,663$287610%2.629.49
9.Belgium$29,837$27789%2.759.48
10.Sweden$28,611$281410%2.559.47
17.United Kingdom$28,222$9183.25%39.26

Data is calculated between 2000-2022. *Mean household disposable income & savings are calculated per annum. Exchange rates may have an impact on the final rankings; for clarification, see the methodology.

The United Kingdom ranked 17th out of the 35 countries analyzed. While UK households have a mean household disposable income of $28,222 (£22,956), which is not far from Sweden, which made it into the top 10, only a mere 3.25% is put towards their savings. 

Amid the ongoing cost of living crisis, essential expenses like housing, utilities, and groceries are dwindling the funds available for savings.

With food prices experiencing their most rapid increase in the last 45 years and utility bills soaring, households find themselves with limited support, unsurprisingly resulting in scarily low savings rates. Furthermore, the substantial debt obligations, encompassing loans and mortgages, absorb a significant portion of the income of UK residents, especially now when mortgage rates have peaked.

Top 3 Countries With The Highest Savings Per Household 

Switzerland residents have the highest household savings with a total savings score of 9.83 out of 10. Households in Switzerland save 17% of their gross income, with $5,908 per year saved on average between 2000-2022. This is 48% higher than the neighbouring country of Austria ($3,058) in the same time period, despite having a similar population size. Switzerland also has the lowest long-term interest rates at 1.44 since 2000 — 63% lower than the long-term interest rates in Luxembourg (2.345).

Luxembourg ranks second with a total savings score of 9.69/10. The country has the second-highest household disposable income between 2000-2022 ($40,398), 35% higher than in the neighbouring country of Belgium ($29,837). Luxembourg residents have mean household savings of $3,028, with 8% of their disposable income put toward savings. Not only this, Luxembourg’s long-term interest rates stand at 2.35, which are the third lowest interest rates globally behind Switzerland (1.44) and Germany (2.28).

The US ranks 3rd, with a total savings score of 9.67 out of 10. With the dollar exchange rate taken into account, the USA has the highest mean household disposable income in the ranking  ($42,592), 45% higher than Canada ($29,442) and 3 times higher than Mexico ($14,102). CityIndex found that American residents have a mean average household savings of $2,961, with 7% of their disposable income going into their savings.

Other countries with notable savings findings  

Chile ranks fourth with a total savings score of 9.63 out of 10. Chile has one of the highest long-term interest rates (5.19) and the lowest mean disposable income at $14,004. Despite this, Chile residents manage to put 11% of their disposable income towards their savings — 3% more than Luxembourg in second place — equating to $1,532 in mean household savings.

Germany, which ranks 5th, was found to have the second highest mean household savings ($3,568), 21% higher than in the neighbouring country of France ($2,876). Not only this, but  the country has the fourth lowest long-term interest rates on the list (2.28), 19% lower than in Belgium (2.75).

Sweden stands out for lower than average long-term interest rates. The country ranks 10th, with a total savings score of 9.47 out of 10. Swedish households have a mean household disposable income of $28,611, over double that of Poland ($16,736), putting 10% of this toward their savings on average.

Sweden has a lower-than-average long-term interest rate compared to other countries in the ranking (2.55) along with impressive mean household savings ($2,814), 12 times more than Finland ($242).

 https://www.cityindex.com/en-uk/.

TUC warns of ‘Debt Timebomb’

Next year will see 11% real-terms rise in unsecured debt with household debt hitting record levels in 2026

  • Britain “cannot afford the Tories” – TUC General Secretary to warn in New Year Message 
  • Paul Nowak calls for early general election to “end years of national decline”  

The TUC has warned that families are facing a “debt timebomb”. The warning comes as new analysis from the union body reveals that unsecured debt (loans credit cards, purchase hire agreements) is set to increase by £1,400 in real terms next year, on average, per household. 

The analysis of official statistics shows that in 2024 household unsecured debt is forecast to rise by 11%.  

And over the course of the next parliament unsecured debt is set to rocket by £6,000 (+43%), on average, per family. 

The union body warned that unsecured debt per UK household is on course to reach a record level of £17,200 by 2026 – exceeding the previous high of £16,800 set in 2007. 

By 2028 unsecured debt per household is set to top £19,000. 

Unsecured debt includes credit cards, loans and purchase hire agreements, and excludes mortgages. The TUC excluded student loans from the analysis. 

Families left exposed  

The TUC says working people have been left brutally exposed to rising costs after years of pay stagnation. 

UK workers are on course for two decades of lost living standards with real wages not forecast to recover to their 2008 level until 2028. 

The TUC estimates that the average worker would now be £14,800 better off if their pay had kept up with pre-crisis real wage growth trends since 2008. 

The union body says the sharp spike in debt, along with stagnant living standards, will “more than wipe out” any gains from the Chancellor’s cut to national insurance tax and leave many families “under the cosh”. 

The Office for Budget Responsibility says the period between 2021 and 2024 will be the worst for living standards (real household disposable income per person) since records began in 1955. 

New Year’s Message 

TUC General Secretary Paul Nowak warns that Britain “cannot afford the Tories” in his annual New Year Message. Calling for an early general election, he said: “Every month the Tories stay in office the more families will be pushed into debt. 

“This party of out-of-touch millionaires is more focussed on clinging to power than on growing our economy and getting living standards rising again. If something doesn’t change, real wages won’t recover to their 2008 levels until 2028. 

“These 13 years of economic stagnation have left working people brutally exposed to the cost of living crisis. We cannot afford a Tory government for one day longer.” 

Highlighting the choice on offer at the next election, Nowak said: “After years of national decline, Labour’s New Deal for Working People would be a gamechanger. It would be the biggest expansion of workplace rights in a generation.  

“No more zero-hours contracts and no more fire and rehire. Employment rights from day one. Union rights to access the workplace. New fair pay agreements. Repealing the attacks on the right to strike. 

“And more than that, the prospect of a new era of a grown-up, constructive approach to industrial relations, where disputes are solved through negotiation. 

“And a clear commitment to put unions and employers at the heart of a modern-day industrial strategy.” 

Highlighting the TUC’s ongoing campaign against the government’s new anti-strike laws, Paul Nowak said: “Nobody withdraws their labour lightly. It is the last resort when employers refuse to talk and refuse to compromise. 

“The action taken by union members [in 2023] forced bosses across the country back to the negotiating table and secured better deals. Unions will do everything in our power to defend that right to strike. It is a cornerstone of our democracy. 

“We won’t be intimidated by this government, and we won’t be bullied. The Tories’ Strikes Act is toxic, unworkable, undemocratic and likely illegal. And it’s a brazen attempt to try stop working people winning better pay and conditions. 

“The entire trade union movement will rally behind any worker who is sacked for exercising their right to strike.” 

Millions left teetering on a financial cliff-edge during the cost of living crisis, says Which?

Almost 8 million people have been overlooked during the cost of living crisis and are now on the brink of serious hardship, Which? is warning.

It comes as new research by the consumer champion identifies 15 per cent of the UK population who are more likely to have turned to credit and buy now pay later schemes (BNPL) during the crisis. These people are at risk of significant financial and mental harm in the months and years ahead as interest rates continue to rise.

Which? surveyed 4,000 people across the UK to find out how different groups of consumers are coping –  financially, physically and mentally – with the cost of living crisis. The research highlights that while the vast majority of consumers have been affected by the cost of living crisis, this pain is not felt equally.

The study identified six distinct groups of consumers who are experiencing the cost of living crisis in different ways. These groups are: ‘Drained and Desperate’, ‘Anxious and At Risk’, ‘Cut Off By Cut Backs’, ‘Fretting About the Future’, ‘Looking out for Loved Ones’ and ‘Affluent and Apathetic’.

While much of the government and policymakers’ focus has rightly been on supporting the ‘Drained and Desperate’ group – who are more likely to have household incomes of less than £20,000 and have already had to make severe financial cutbacks, such as skipping meals and not turning on the heating.

Outside of any universal support available like the government’s support for energy bills, this ‘Anxious and At Risk’ category has been largely overlooked.

The ‘Anxious and At Risk’ group contains 7.9 million adults – 15 per cent of the UK population. They tend to be from larger households with children at home and are struggling financially but have just managed to keep afloat by using credit.

However, unlike the ‘Drained and Desperate’ group, they are much more likely to have borrowed money to maintain basic living standards than to have cut back on essentials, such as food and energy.

Six in ten (59%) have increased their debt in the last six months – the highest amongst all groups.They are also more than twice as likely (36%) as the UK population (14%) to have used buy now pay later schemes.

With interest rates continuing to rise, it is only a matter of time before this group is unable to keep up this cycle of borrowing and fall into financial difficulty.

One woman from northern England in this ‘Anxious and At Risk’ group said: “I have to use credit to make ends meet and I worry about debt. I have no safety net for emergencies and I will have to work past state pension age.”

Four in 10 (38%) of this group have a mortgage or loan on their home and worryingly, one fifth (21%) of those with a mortgage are on a variable tracker mortgage – meaning their rates are hiked every time the Bank of England base rate rises.

The Bank of England has raised interest rates significantly in the last year in attempts to combat inflation, meaning those on fixed-rate mortgages who are remortgaging this year will also be faced with massive hikes to their mortgage payments. This could be a major tipping point for ‘Anxious and At Risk’ households.

It is also hugely concerning that millions are heavily relying on Buy Now Pay Later schemes. Previous Which? research shows that many BNPL users do not realise they are taking on debt or consider the prospect of missing payments.

The government must not delay plans to introduce changes to the BNPL industry and ensure that consumers are given stronger safeguards to protect them. This needs to include greater marketing transparency, information about the risks of missed payments and consumer credit checks.

At such a difficult financial time, businesses must also do everything in their power to ease pressures on household budgets. Which? is calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help their customers and ensure they are providing value for money.

For example, supermarkets need to make budget line items that support a healthy diet widely available – particularly in convenience stores.

Telecoms firms must cancel future mid-contract price hikes and energy firms need to ensure their customer service departments are fully staffed and able to support any customers who are struggling to make ends meet.

Rocio Concha, Which? Director of Policy and Advocacy, said:  “Our research reveals that almost eight million people have been left balancing on a financial knife-edge.

“Until now, the government and policymakers have rightly focused on supporting the millions who are already failing to make ends meet, but this ‘Anxious and At Risk’ group is a ticking time bomb.

They are far more likely to have relied on borrowing to make ends meet but with interest rates continuing to rise, it’s only a matter of time before they find themselves facing serious hardship.

“The government must help those most in need by tightening regulation on buy now pay later to stop unaffordable lending and ensuring essential businesses are doing everything in their power to ease pressures on household finances.”

Do you need help to deal with your debt? Granton Information Centre can help: call 0131 551 2459, 0131 552 0458 or email info@gic.org.uk

Later life debt fears rise, as over 55s worry about mortgage rate increases

Almost half of people (46%) over the age of 55 who are paying off mortgages are worried about rising rates, continuing to meet repayments and how to pay their loans off in full, research from PensionBee, the leading online pension provider, suggests.

The research carried out in June indicates that three quarters of respondents over age 55 who have mortgages are worried about rising interest rates (76%, Table 1) and concerned about how they will manage their payments to the end of term (62%, Table 2).

Respondents aged over 55 with a household income of less than £30,000 were more worried about rate rises than average (83%) and also about managing repayments to the end of the term (72%).

One in five over 55s on interest-only mortgage deals

Worryingly, less than half of over 55 respondents said they are on capital repayment mortgages (42%, Table 4), while 40% said they are on ‘part capital repayment, part interest only’ and almost one in five (18%) of over 55 respondents with mortgages are on interest-only deals, meaning that when they get to the end of their mortgage term, they will have to have enough cash available to pay off the remaining capital balance. 

Uncertain repayment plans

Almost half (46%) of mortgage holder respondents aged 55 or over admitted they are unsure how they will pay off their mortgage in full. The most common remaining mortgage balance was less than £50,000 (Table 10), however, a small proportion (6%) of respondents reported their balance exceeding £250,000. 

Using a capital lump sum (22%, Table 9) was noted as the most common way respondents over age 55 were planning to pay off their mortgage in full, while using a pension (16%), selling the house (11%) or using equity release (5%) were other options being considered. 

Becky O’Connor, Director (VP) Public Affairs at PensionBee, commented: “The current mortgage rate rise shock may be contributing to an abrupt rethink of retirement plans and causing worry and uncertainty among the population of older homeowners still repaying loans. 

“Anyone hoping to wind down from work as they approach their pensionable years and who still has a mortgage to pay could face a significant reality check in the coming months. Their mortgage could suck away even more of their disposable income, potentially forcing them to work for longer. 

“Those on interest-only deals will not only face potential rate rises, but the additional headache of a looming deadline for repayment of their capital balances. Money they might have earmarked for repaying the capital at the end of the term might now need to go towards monthly repayments. 

“It’s worrying that almost half of respondents in this older age group are not sure how they will repay their mortgage in full. One in five are pinning their hopes on a capital lump sum, while one in six think they will use their pension. 

“People can access their pension from age 55 and can take 25% as a tax-free lump sum. With mortgage rates rising so rapidly, it may be tempting to tap the pension to pay off a home loan. 

“Having a mortgage that runs into retirement can be a problem, because repayments can mean people have to take more out of their pensions in the early years.

“Anyone who is considering this must bear in mind the potential impact of using up tax-free cash early on in retirement and then running the risk of not having enough money later on to maintain enough income for a decent living standard.

“Pensions are designed to provide this income. While it can make sense to use some of the pot to pay off mortgages, it’s good to be aware of what this can do to living standards in retirement.” 

Working longer to pay the mortgage

Almost one-in-five (19%, Table 3) mortgage holder respondents over the age of 55 are not working, with 22% saying they work part-time and 59% working full-time. Looking just at respondents aged over 65 who have a mortgage, the majority of whom will also be in receipt of the State Pension, 65% said they are still working full-time or part-time, suggesting that the need to continue to repay a home loan keeps people in work for longer. 

There was a correlation between employment status and repayment type, with full-time workers over age 55 more likely to be making capital mortgage repayments and unemployed people more likely to be making interest-only payments, which tend to be lower.

Later life rate rise expectations

Almost half (47%, Table 5) of homeowner respondents aged over 55 identified their current mortgage interest rate as between 2 and 4%, with 12% on a lower rate of 1 to 2% and 25% on a rate of 4 to 5%. Just over one in 10 said they are paying between 5 and 6%, and 5% said their mortgage rate was over 6% (Table 4 below).

Just over a quarter (28%, Table 6) of those surveyed noted that their current mortgage deal is coming to an end either this year or in 2024. The vast majority (76%) of over 55s expect their repayments to increase in the next few years – at a time in life when people ideally look forward to lower housing costs.

Embarrassment stops Scots from seeking financial help

  • Nearly 4 in 10 say they wouldn’t ask for financial help if they were in trouble due to embarrassment
  • 81% say they feel anxious about their financial situation
  • 44% say they feel more worried about their financial situation now, compared to a year ago

New research has revealed that those in Scotland are the most at risk of financial turmoil due to embarrassment about their financial situation.

The findings, which were part of a UK-wide study by financial comparison website, NerdWallet UK, found that those in Scotland – alongside those in the South West – are the most likely to not seek help should they find themselves in financial difficulty due to the embarrassment around the topic.

Almost two-fifths of those surveyed said that embarrassment would stop them from seeking help, while just under one-third would be concerned about the impact doing so would have on their credit history, as well as worries around confidentiality. The same number also believe they can manage on their own and do not need external help.

Other reasons which would stop Scots from getting help include, the cost of getting financial advice (29%), and worryingly, just over a quarter said they were not aware of any organisations to help them with debt, or how to contact them.

If I was struggling financially, the following would stop me from asking for help – Scotland:

ReasonPercentage who agreed
I would feel embarrassed37%
I’m worried about the impact on my credit history31%
I’m worried about confidentiality31%
I think I can manage on my own31%
I don’t want to pay for advice29%
I don’t think my financial situation is serious enough28%
I’m not aware of the debt help organisations or how to contact them26%
I don’t want to speak about my problems on the phone23%

This is despite 81% of Scots saying they feel anxious about their financial situation, and 25% saying these feelings are daily occurrences.

Furthermore, 44% of respondents in Scotland say they feel more worried about their financial situation now, than they did a year ago.

When asked who they would go to or help first, almost half (48%) said they would speak to their partner or close family member, while 12% said they would speak to a friend.

Adam French, senior editor at NerdWallet UK, said, “It’s worrying that so many Scots would not get help due to embarrassment. Struggling financially is never something to be embarrassed about, and if the cost of living crisis has taught us anything over the last 18 months, it’s that financial trouble can happen to any of us, at any time.

“Getting help when you first find yourself in financial difficulty, and not burying your head in the sand can help to relieve a lot of stress and anxiety around money, and find a way out before things get worse.

“There are plenty of independent experts and companies available to speak to, for free, including Granton Information Centre, the Citizen’s Advice Bureau and Step Change. Everything is confidential, and discussing concerns will not impact your credit score.”

For information on NerdWallet, and to view the full dataset, visit: 

https://www.nerdwallet.com/uk/personal-finance/money-and-mental-health-study/

Christians Against Poverty launch ‘Taking on UK Poverty’ report

CAP 2023 CLIENT REPORT

Summary:

In 2022, the cost of living continued to rise, while household incomes fell behind. Rates of priority debt went up, and more people struggled to pay household bills. We saw higher demand for emergency food shops, fuel vouchers and help with essentials.

A big concern found in our latest client report is that over half of CAP clients’ budgets were unsustainable due to low income. More people are being driven to extreme poverty and destitution, and one in two CAP clients have considered or attempted suicide before seeking help.

As a society, we have a severe problem on our hands and we cannot allow it to continue. At CAP, we’re pushing our 27 years of expertise to the limits and doing everything we can. Last year, we helped 9,168 people with their debts, delivered emergency support to 1,831 homes, and played a part in encouraging over 4,000 local churches to open Warm Welcome Spaces during the winter.

Now is the time to come together and fight back. Because poverty isn’t going anywhere unless we do something about it. Read our latest client report and find out how, together, we can take on UK poverty.

CAP-Client-report-2023Download

Money worries? Local help available

WORRIED about your energy bills?

Find out about help you can get to heat your home more efficiently and reduce your heating bills at: http://homeenergyscotland.org

You can find local support and advice at:

http://edinburgh.gov.uk/costofliving

Granton Information Centre

Advice on welfare rights, housing, rent arrears, debt and money.

Call 0131 551 2459 or 0131 552 0458

Email info@gic.org.uk