Support for Mortgage Arrears
Support Available Amid Rising Tide of Mortgage Arrears
Aoife Deery is Senior Social Justice Policy Officer at Citizen's Advice Scotland
This column was first published in the Herald on 23 January 2022.
The arrival of the pandemic in early 2020 set off a financial earthquake and sparked fears about the effects on millions of households.
While a slew of state interventions including support grants, an uplift in Universal Credit and furlough undoubtedly helped we continue to see powerful aftershocks rip through household budgets as the Treasury has withdrawn many of these measures and the cost of living has rocketed.
There is currently such a multitude of financial hardships facing people across the country that it can be hard to keep up and accordingly the growing issue of mortgage arrears often slips below the radar.
Across the Citizens Advice network in Scotland, we have seen worrying and sustained growth in demand for support with mortgage arrears. Our most recent national data shows that between July and September of 2021, the network provided more than 600 pieces of advice on mortgage arrears. While this may not sound drastic, the growth in demand should set alarm bells ringing in government, as a proportion of all advice it represents a 38% increase compared to the same period in 2020.
Perhaps most worryingly is that the rising demand appears likely to continue through 2022. This is in part a result of the fact that mortgage-holders receiving Universal Credit can only get help with housing costs after claiming for nine months and are not able to have any earned income or breaks in this period. This issue has become particularly acute given many mortgage-holders moved on to Universal Credit during the pandemic and therefore were vulnerable to building up arrears on mortgage payments.
There are well-justified fears that the numbers struggling with arrears will continue to grow as we move further into the year and pandemic support measures including mortgage payment holidays end.
This is compounded by the fact that there is no sign of the rapid rises in cost of living slowing down as inflation and energy prices rise and incomes stagnant or fall in real terms. Indeed, following the Bank of England’s decision to raise interest rates, some mortgage-holders may also see their monthly repayments rise.
Lenders are legally obliged to treat you fairly and consider any request to change the way you pay your mortgage; they are expected to do everything possible to come to a payment arrangement and repossessing your home should be the last resort.
While this requirement is of course a good thing it frankly will not be enough for many. What mortgage-holders facing arrears need is additional support from policymakers.
The UK and Scottish Governments rightly said nobody should lose their home because of the pandemic and with the financial ripple effects set to continue support must be in place to ensure this becomes a reality.
In the meantime, the situation facing many is intimidating but people who are struggling with money aren’t alone – the Citizens Advice network is here to help and can support you with a wide range of financial hardships. The network has helped over 171,000 people in Scotland during the pandemic with a vast range of issues and unlocked around £147million overall in the process.
So, if you are feeling financially overwhelmed the Citizens Advice network is available online or at your local bureau with free, confidential and impartial expert advice.