Homeowners raid savings and pensions to keep on top of mortgage payments

Homeowners are raiding savings or reducing pension contributions to help with soaring mortgage costs, according to the KMPG’s latest Consumer Pulse research.

The study tracks how more than 3,000 households say they’re dealing with the cost of living.

When asked what action they were taking - or considering taking – to keep on top of mortgage payments, households said they’d used up savings (18%) or reduced payments into their pensions (11%) to deal with the problem.

A further 16% have switched onto an interest only mortgage, while 12% have lengthened their mortgage term to reduce payments, with a further 71% considering taking these actions to protect their homes.

Households have also reduced non-essential spending with over half (56%) having cut back since the start of 2023.

70% have reduced the amount they eat out, with 60% cutting back on takeaways and 60% buying fewer clothes.

And they’ve not just been cutting back, with KPMG noting that households are also changing their buying behaviour, with 41% buying more own brand/value products and 39% shopping around for discounted items to keep costs down.

A third (29%) said they have switched to shopping at less expensive shops with one in five saying they’ve bought more pre-owned items this year.

What should you do if you can’t afford your mortgage?

The government, FCA and lenders agreed to the mortgage charter earlier this year to provide homeowners with some protection from rising interest rates. Under the charter, any homeowners worried about their mortgage repayments can contact their lender for help and support.

Homeowners have the option to either take a payment holiday or moved to an interest only product for six months without affordability checks being carried out and it affecting your credit file.

Lenders will only procced with repossession proceedings as a last resort or when it’s in the interest of the homeowner.

If you’re struggling, speak to your lender straight away. They’ll normally write to you within 15 days of a missed payment, but you shouldn’t wait until then to speak to them.