By Sarah Macklin 
With the cost of living crisis seeming to get worse and not better, new survey data shows the true extent of the effect it is having on the UK population.
Global technology leader Dye & Durham conducted a survey of 2,000 UK homeowners with a mortgage, and the results are staggering.
More than half of UK mortgage holders (56%) stated that the ongoing cost of living crisis is affecting their mental health. With constant updates on morning television and our social media feeds, it’s not surprising that this is the case. It sometimes feels like you can’t get away from it, and it’s more doom and gloom every day. These homeowners have genuine concerns over their own financial situation, and even that of their families (children trying to purchase a home, or elderly parents who can’t afford their own repayments or increased energy bills).
A third (30%) say they are worried that they will fail to make some mortgage repayments in the next 12 months, with younger people expressing the most concern (42% of 18 to 24 year olds).
In addition to this, more than a third (36%) said they could only afford to continue paying their mortgage for two months if the main breadwinner lost a job. This means repossessions could become a rising risk for the UK’s property market.
Martha Vallance, Chief Operating Officer for Dye & Durham, says: “The effects of high interest rates, energy bills and the increased cost of living overall cannot be underestimated. Our survey data shows Britons are extremely concerned about both their short- and long-term future and have reduced spending, raided savings and are delaying major purchases.
“For legal professionals that rely on property transactions this is likely to have a significant effect for the duration of 2023 and beyond. Now is the time to start evaluating technologies that can help modernise their businesses and help them save money by reducing unnecessary costs.”
Economic uncertainty is weighing on the minds of property owners, with 69% concerned about the financial future for themselves and their family. Two thirds (66%) say they are worried their children or grandchildren will be unable to get on the property ladder due to affordability.
Just under half (43%) of survey respondents confirmed they have taken to selling personal items to better manage household budgets and more than half (55%) have made personal sacrifices so their family and children are not impacted – for example by eating less, or not buying clothing or shoes for themselves. Already to date, 25% of respondents have had to delve into savings to put cash towards day-to-day expenses such as food or heating.
Other findings of note from the survey included:
• More than a third (36%) of respondents expect it will take significantly longer to pay off their mortgage than originally anticipated
• One in three (35%) expect to delay home renovation or improvement projects
• Almost one fifth (19%) expect they will need to delay retirement plans – increasing to nearly a quarter (24%) of 45 to 54 year olds
• Three in five (60%) homeowners have cut-back on takeaways or meals out to manage monthly outgoings – including two thirds (66%) of those aged 55 to 64. More than half (52%) say they have reduced clothes shopping
• 39% of Londoners have returned to the office to save on energy bills, reducing their own electricity and heating usage at home.
Paul Clarke, UK Product Lead at Dye & Durham, adds: “For those concerned about making mortgage payments, seek advice from a mortgage advisor or your lender as help is available. It may be possible to secure a mortgage holiday or switch to interest-only payments for a temporary period. Selling a property can take a minimum of two to three months from sale agreed to completion, so for those considering downsizing to minimise mortgage commitments, don’t delay consulting an estate agent or legal conveyancer for advice.”
Property and legal professionals including solicitors, lawyers, legal firms, estate agents and mortgage brokers saw record numbers of property transactions following the Covid-19 pandemic. While this had a positive impact on the bottom line of many sector professionals, the increased volume of sales meant broader strategic plans were placed on hold. With a slower and more challenging market expected throughout 2023, and many consumers adjusting their plans due to the cost of living constraints, it presents a chance for industry professionals to implement plans to improve operational efficiency.
“With transaction volumes likely to be reduced this year due to consumer concerns over the cost of living crisis, professionals now have the opportunity to take a closer look at their operations and evaluate ways to improve efficiency for both their businesses and their customers,” explains Clarke.
“By improving their processes and workflows now, to support a more agile approach to transactions and practice management, it will provide a real advantage once the market bounces back to previous levels.”
A Summary:
• 56% of UK mortgage holders say the cost-of-living crisis is affecting their mental health
• 30% worried they will fail to make mortgage repayments within the next year
• One third (36%) could not afford to continue paying their mortgage for more than two months if a job loss affected the main earner in their household
• Two thirds (66%) are worried their offspring will be unable to get on the property ladder
• More than three-quarters believe the UK is in a recessionary phase: 42% believe the nation is in a recession now while 35% say we are about to enter one
Jeremy Davidson