1,627% rise in Scots who fear they won’t be able to pay mortgage

‘I believe they’re on holiday from the UK’

SOARING numbers of homeowners are seeking advice on mortgage arrears as Scotland’s middle classes are hit by the cost of living crisis.

Citizens Advice Scotland (CAS), which offers financial help and guidance, recorded a ten-fold increase in inquiries about home loans on its website between June 2021 and June this year.

Views of the CAS page for ‘What to do if you can’t pay your mortgage’ also rose by 1,627 per cent over the 12 months.

Meanwhile, views of the page with information on ‘Schemes that can help if you can’t pay your mortgage’ jumped by 53 per cent and advice on ‘Selling your home to pay your mortgage debts’ increased by 81 per cent.

The figures published today by CAS suggest thousands of Scots are worried about keeping a roof over their heads as rising prices and energy bills squeeze household finances.

Separate research published last week also revealed a quarter of middle-class families earning between £40,000 and £50,000 have cut back on basics between March and June this year. CAS social justice senior policy officer Aoife Deery said: ‘We are seeing soaring demand online and across the Citizens Advice network from people who are struggling to pay their mortgage.

‘The increase in interest rates, coupled with the general impact of rising inflation, risks supercharging this problem and we anticipate starting to see large groups of people unable to pay their mortgage.

‘Lenders legally have to treat you fairly and consider any request you make to change the way you pay your mortgage.’

She added: ‘We’re for everyone, regardless of background or circumstance, and we don’t judge – we just help.’

The trade association for the UK banking and financial sector said homeowner property repossessions had increased 5 per cent over three months since March.

There are 25,160 in early arrears, which is defined as 2.5 to 5 per cent of the outstanding balance – a rise of 1 per cent on the previous quarter but down 14 per cent year on year. Between April and June, 630 homeowner repossessions took place and, as the Bank of England increased interest rates to 1.75 per cent last week, more could be on the horizon.

Research by the Office for National Statistics found that, of the 5,000 who answered a poll, more than a quarter said they had cut back on basics such as food between March and June.

More than a fifth of those earning more than £50,000 said they also had cut back. Separate research revealed even high earners on between £70,000 and £80,000 were likely to be financially insecure and more than half felt stressed about money.

Those with bigger homes will have larger increases in energy bills this winter as the price cap rises. Many will spend savings built up over lockdown to cover the increases, leaving them in a financially vulnerable position.

Heidi Allan, head of financial wellbeing at financial adviser Lane Clark and Peacock, said: ‘Cost of living pressures do not only affect the lower-paid and those on benefits.

‘Our research suggests even mid and high earners can face money worries in the current extreme climate. A higher earner may be the only breadwinner in a family or they could be of an age where they have older dependants as well as young adults that rely on them.’

Estate agent Savills, which earned more than £1 billion in revenue this year through booming house sales, said the rising cost of debt has started to drag down price growth after it had soared following the pandemic.