Renters are nearly five times as likely to face financial vulnerability as those who own their home outright, a new ONS report revealed.
Despite rapidly rising interest rates, tenants are at far more risk than those who own their home with a mortgage – who are twice as likely as those who own outright to struggle financially.
The ONS said young people are more likely to fall into financial difficulties, with those aged 25 to 34 being 3.4 times more likely compared with those aged over 75.
Overall tenants report spending a higher proportion of their disposable income on rent (21 per cent), than mortgage holders on their mortgage (16 per cent), according to the latest data from the Living Cost and Food Survey.
But the survey was conducted before mortgage rates began to spiral recently.
In the past two weeks 1 in 20 adults reported that they had ran out of food and had been unable to afford more.
It highlighted those most at risk of struggling in the cost of living crisis.
Disabled adults are twice as likely to become financially vulnerable compared to non-disabled adults.
The figures revealed that over a third of adults report finding it difficult to pay their mortgage or rent at the moment.
Around 4 in 10 (43 per cent) tenants reported that it was difficult to afford their rent, and around 3 in 10 (28 per cent) mortgage holders said it was difficult to afford their payments.
The survey was carried out between 8 February to 1 May 2023, before the rapid rise in interest and mortgage rates seen over the past month.
Mortgage holders face an even more significant financial hit when they go to remortgage on to a new fixed deal after this.
Millions of homeowners face coming off a sub-2 per cent rate on to a much higher fixed deal. Rent is also increasing as landlords face higher mortgage costs and supply remains tight.
Lenders saw an increase in the number of customers defaulting on their mortgages in the three months to the end of June, and expect more borrowers to miss payments in the coming months.
The Bank of England delivered its thirteenth successive base rate rise last month, after stubbornly high inflation led the Monetary Policy Committee to continue its efforts to bring the figure down.
Two-year fixed mortgage rates have reached a 15-year high, surpassing the level reached at the peak of the fallout from the mini-Budget in October last year.
The current average two-year fixed rate is now 6.78 per cent, according to Moneyfacts, and the market expects rates to climb further before the end of the year.
As such, nearly half of adults (48 per cent) who currently pay rent or a mortgage reported that their payments had increased in the last six months.
Inflation continues to hammer household budgets as the rising costs outpaces incomes leaving many in the red and having to go without essentials.
In the past two weeks, 1 in 20 adults reported that they had ran out of food and had been unable to afford more.
This figure rises rapidly for those receiving support from charities to almost half – 45 per cent. And for those receiving some form of benefits or financial support it’s 21 per cent.
Multiple ethnicity adults, black and black British adults are also disproportionally affected.
In a more recent survey 92 per cent of adults see the cost of living as an important issue facing the UK and 60 per cent say their cost of living had increased compared with a month ago.
Households are struggling to afford basic items as inflation continues to hammer budgets
Overall around 14 per cent of renters ran out of food in the past two weeks compared with 3 per cent of mortgage holders.
And 9 per cent among adults in the lowest quintile of annual personal income compared with just 1 per cent of those in the fifth and highest quintile.
Laura Suter, head of personal finance at AJ Bell, says, ‘The figures lay bare just how difficult some households are finding this drawn-out cost of living crisis, with around 2.65 million UK adults having run out of food and being unable to afford more in the past two weeks.
‘What we’re seeing emerge is a split society: those who are facing higher rent or mortgage costs thanks to rising interest rates are far more likely to be experiencing financial vulnerability, compared to older and wealthier people who own their own home outright and so are protected from the negative effects of rate hikes.’
