Happy new year! It’s fair to say that 2022 didn’t turn out to be the year many of us were hoping for. What was supposed to be a glorious emergence from the on-off pandemic restrictions turned out to be an equally testing 12 months, with a cost of living crisis squeezing millions of households.
And while January is supposed to be a time of new beginnings, with economists warning of a recession set to last the whole of 2023, it’s difficult to find a silver lining.
Which?’s latest Consumer Insight tracker, our measure for consumer sentiment and household financial wellbeing, found that nearly two million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill payment towards the end of 2022.
Missed payments are typically higher in January (we estimated two and a half million last year), so we may well see this figure rising at the start of 2023, as households cope with the financial aftermath of Christmas as well as continued cost of living pressures.
What’s more, current financial support available to consumers is set to either end or become less generous within months. The Energy Price Guarantee, the government’s scheme to limit the amount suppliers can charge per unit of energy used, ends in April, and we are still awaiting the result of the Treasury’s review into what will replace it.
Against that backdrop, it’s easy to feel forlorn. But burying our heads in the sand when it comes to our personal finances is not going to improve anything. If you’re struggling to pay bills, then support should be available.
When it comes to energy bills, start by contacting your provider whose duty it is to find customers a payment plan that they can afford. Your provider may offer a payment break, more time to pay or access to hardship funds. If you are on a prepayment meter and can’t top it up, your supplier may be able to offer emergency credit or a pre-loaded card to top up your account.
The Bank Of England has predicted that four million households will face a significant increase in mortgage payments in 2023 and Which? research reveals that 2.5 per cent of mortgage holders and 6.4 per cent of renters have already missed a housing payment in December.
If you think you will struggle to make mortgage repayments contact your lender. It might be able to offer a temporary payment holiday, to extend the term of your loan to lower monthly repayments or a temporary switch to interest-only payments. If you’re entitled to benefits such as Universal Credit, you may be able to apply for the government’s Support for Mortgage Interest (SMI) scheme.
For renters, speak to your landlord or lettings agent (if you live in a managed property). Your landlord isn’t obliged to offer support, but may be willing to discuss a compromise that allows you to keep living in the property. This could involve reducing your monthly payments for a set period of time while you get on top of your finances.
For more information take a look at the Which? guides on what to do if you can’t pay your rent or mortgage. This year is likely to remain a tough one financially as the high cost of living continues unabated. Instead of burying your head, face your finances head on – and ask for support if you need to. n which.co.uk
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