Surge in middle-class homeowners calling debt advice line

Middle-class homeowners struggling to make ends meet are seeking help from a debt advice line as soaring mortgage rates and bills take their toll.

These middle-income earners, who have faced unexpected financial struggles because of rising costs, have typically not had previous experience of debt, according to the Money and Pensions Service ( Maps), which is the largest funder of free debt advice in England. Among those affected are landlords and those on salaries of more than £65,000.

Money Wellness, one of the organisations commissioned by Maps to deliver debt advice, currently helps about 1,000 people every day.

Sebrina McCullough, its director of external affairs, said: “We have seen a marked rise in calls from people with income over £40,000 a year, who own properties and are in full-time work.

“We’ve seen everyday bills – gas, electricity, fuel, food – have an impact across all demographics. But the increase in mortgage interest rates is a big one. Interest rates have been so low for so long that people weren’t ready for the shock. It’s not just the cost of credit, but the cost of everything across the board.

“It used to be that once you owned a

property, you lived a more affluent life. You might not have huge amounts at the end of the month, but you could keep your head above water. But now, after mortgage rates have gone up, the water level has risen.”

This year about 1.6m fixed-rate mortgage deals are due to expire, and many homeowners face refinancing at double the interest rate they previously paid.

Overall, higher mortgage rates are expected to affect about 5m households by 2026, according to the Bank of England.

At the end of 2021, only 7pc of the homeowners contacting Money Wellness already had mortgage arrears, but this had risen to 25pc by December last year. Average monthly mortgage payments have almost doubled, up from £520 a month in December 2022 to £904 in December 2023, while the amount homeowners spend on mortgage payments over the same period has shot up from 24pc to 45pc of net take- home pay. According to the Affordable Housing Commission, if you need to spend more than a third of your income on renting or purchasing housing, it is unaffordable.

The financial shock from sharp rises in mortgage payments has plunged many families into negative budgets, with less money coming in than the bills going out.

“The pressures on household budgets over the past two years have been immense,” said Ms McCullough.

“I would encourage everyone to do an annual MOT on their finances. Don’t wait until you are struggling. It’s not a weakness to seek debt advice, it’s a strength.”

With bills piling up more people are contacting groups such as Money Wellness