By Suban Abdulla
LONDON (Reuters) – Millions of British borrowers repeatedly missed payments on bills in the six months to January amid the steep surge in the cost of living and higher interest rates, a survey from the Financial Conduct Authority regulator showed on Tuesday.
British households have faced double-digit inflation since September and the government’s budget forecasters have said the country is heading for a record decline in living standards over the two years to March 2024.
The FCA said the number of adults in Britain who missed payments on domestic bills or failed to meet any of their credit commitments in three or more of the six months to January rose to 5.6 million from 4.2 million in May 2022.
Sheldon Mills, executive director of consumers and competition at the FCA, said the research highlighted the “real impact” of the rising cost of living.
The financial watchdog began collecting the data in May 2022 after Russia’s invasion of Ukraine sent the cost of energy and food soaring.
It received 5,286 responses from people it contacted – and who took part in the earlier survey in May 2022 – between Dec.6 and Jan. 16.
The latest survey also showed a significant rise in the number of people struggling to keep up with payments who now accounted for one in five adults.
With the Bank of England raising interest rates sharply to tame inflation, 29% of respondents who had a mortgage in May 2022 reported an increase in payments in the six months to January, while 34% of tenants reported a rise in their rent.
“The convergence of higher living costs and higher interest rates has pushed people’s finances right to the edge and sometimes over,” Karen Noye, mortgage expert at Quilter said.
A separate report from the Resolution Foundation, a think tank, last week showed some 1.6 million British households were yet to face an average increase of 2,300 pounds ($2,902.83) in their fixed-rate mortgage bill over this year and next year.
Richard Lane, director of external affairs at debt charity StepChange, said demand for advice services was the highest in three years with many people unable to afford “once-in-a-generation” price rises.
The FCA, which supervises banks, urged lenders to provide tailored support for struggling consumers.
It also said it will introduce its Consumer Duty rule in the coming months, requiring firms to ensure they provide better support for consumers.
($1 = 0.7923 pounds)
(Reporting by Suban Abdulla; Editing by William Schomberg)