StepChange says rate rise adds to cost of living woes for people experiencing debt
StepChange Debt Charity comments that today’s announcement by the Bank of England of a half percentage point rate rise is yet another pressure point for people struggling to avoid or deal with debt during the current cost of living crisis. More than one in seven of the people who contact StepChange for help are home-owners, who are likely to be those who will feel the financial pressure of rising rates most directly – especially if they are reaching the end of an existing fixed rate deal.
People with other types of borrowing – including credit cards, personal loans and overdrafts – are also likely to see a potential increase in the cost of borrowing although the impact may be less clear. The cumulative effect of higher borrowing costs and high inflation will increase the pressure on households trying to keep up with their bills and avoid a problem debt situation.
Richard Lane, StepChange Director of External Affairs, said: “While higher interest rates may be needed to dampen down inflation, right now struggling households are having to cope with both. For many people, the overall cost burden simply isn’t sustainable, and with energy bills set to rise even further than previously expected, the pressure won’t be easing off any time soon.
“Affordability and debt are going to need to be top of the list for the next Prime Minister. In the meantime, anyone struggling should visit StepChange’s dedicated cost of living hub, which is full of useful pointers on how to start dealing with current financial pressures. Home-owners worried about mortgage arrears can talk to our in-house mortgage arrears advice team, and we also have a dedicated mortgage advice service which is free to access for anyone, whether or not they are experiencing debt problems.”