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Press release: New research pinpoints mortgage holders struggling due to high interest rates and the cost of living crisis

7 November 2023

Many households in Northern Ireland are facing an unprecedented challenge with recent mortgage interest rate rises and the cost of living crisis sees many mortgage holders facing severe financial difficulties. Since December 2021 to August 2023, there have been 14 consecutive interest rate rises from 0.1% to 5.25%. Whilst there have been no further increases since August 2023, interest rates remain stubbornly high at levels not seen in over a decade. (1.)

Research commissioned by Housing Rights reveals a concerning trend in Northern Ireland, where an increasing number of households are struggling to make their mortgage payments.

The burden of rising mortgage repayments has placed immense strain on many households, particularly those with interest-only and variable rate mortgages. It has also heightened the vulnerability of specific groups including households with a member with a disability, lower income households, older mortgage holders, those with children and those living in rural areas.

Interest-only mortgages have emerged as a major point of concern. Many borrowers with interest-only mortgages are finding it increasingly difficult to make ends meet as they struggle to cover monthly repayments and save for their capital payment. Almost a third (31%) of households on an interest only mortgage said their mortgage was not affordable, with a quarter (25%) reporting that they have struggled to make payments in last 12 months.

Variable rate mortgage holders are also struggling with rising interest rates. 81% of homeowners on a variable rate reported paying extra on their mortgage than they were 12 months ago, compared with 28% of those on a fixed rate. These rises in monthly repayments have created financial instability and unpredictability. One fifth (20%) of households on a variable rate mortgage reported frequently or always running out of money before payday, and 34% said their mortgage was not affordable.

Lower income households are more likely than higher-income households to be on a variable-rate or interest only mortgage and are therefore more exposed to the financial shock of interest rate rises. Over a quarter (27%) of lower income households said they were finding it difficult on their current income compared to 15% of higher income households and 29% thought their mortgage was not affordable, with over a quarter (26%) saying they had struggled to pay their mortgage in the past year.

Adding to this critical issue is the heightened vulnerability of households with a member with a disability. Those with disabilities often face additional expenses related to healthcare, accessibility, and other essential needs. The rising mortgage crisis places an even heavier burden on these individuals and their families, who are already dealing with numerous challenges. Over half (54%) of households with someone with a disability are paying more than they were last year on their mortgage. 25% said their mortgage was not affordable, and half (50%) have had to borrow money in the past year to make ends meet.

The research also identified older mortgage holders as particularly vulnerable, with those aged 45 and over (18%) the age group most likely to say they always or frequently ran out of money before payday compared to 12% of 35 to 44 year olds and 9% of those aged under 35. One fifth (20%) of respondents aged 35 to 44 and 45 and over were more likely to say their mortgage was not affordable than those aged under 35 (9%).

Interviews informing this research were carried out in May and June of 2023, providing a snapshot in time. Since then, the Bank of England base rate has risen from 4.5% to 5.25%, and many more fixed-rate deals will have expired. With the situation worsening for many this research highlights the pressing need for action to be taken to help mortgage holders who are struggling.

Natalie Whelehan, Head of Policy and Development at Housing Rights said:

This important research paints a picture of serious difficulties for an increasing number of households in Northern Ireland. In recent months, we have seen a disturbing increase in the number of repossession hearings in Northern Ireland. The research shows that vulnerable groups are being hardest hit. We urgently need a functioning Executive and a plan of action to be put in place to support and assist vulnerable mortgage holders as soon as possible.

Assistance should include ensuring access to justice, including advice and court representation for those subject to repossession hearings, which will require making additional resources available, the exploration of a fit for purpose mortgage rescue scheme for Northern Ireland, the reinstatement of Support for Mortgage Interest (SMI)  as a non-repayable grant that can be accessed after 13 weeks and the adoption of an end to end, ‘person-first’ approach by lenders and their agents to support customers and meet their needs.

(1.)The last time the interest rate was set as high as 5.25% was February 2008. Source BOE 

Contact Housing Rights for further information