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Policy help must target low-income families but there’s increasing pain in the middle too

People on the lowest incomes need all the help they receive and more. But there’s increasing pain in the middle range with essential outgoings continuing to rise.

Significantly higher mortgage payments will kick in for 1.7 million households this year. The effect on bond markets of inflation in April and further base rate rises in prospect is already raising mortgage rates. Rents continue to rise. For many estimates of the average increase in monthly outgoings reach £300 and often much more. Evidence from:

Mounting evidence

Evidence is mounting that policymakers will have to do something for more families previously thought able to manage. As well as higher incomes these people may have savings or scope to cut back. Yet we hear reports of missed payments, use of high-cost credit and the often devastating ‘cliff-edge’ effects of benefit thresholds. This is surprising and alarming and not just for those affected but the wider economy.

CITA mortgage vies
Prospect of higher monthly repayments as fixed deals mature.

Citizens Advice
We offer help in person and online. Many different client statistics reveal the weight of current cost pressures. Here we focus on mortgages. Middle-income families are facing much higher monthly repayments following the maturity of fixed low-payment deals. A notable increase in online mortgage advice page views tells its own story (chart). (1)

Resolution Foundation
In a survey of 10000 adults the think tank found the cost crisis had made life much harder for younger and poorer people. Still they report that three quarters were trying to cut back on spending; 50% were using savings; and 28% of respondents in the middle fifth of the income range said their health had been affected. (2)

Royal London
Research for the insurance company in March found people earning between £40,000 and £80,000 saw monthly outgoings rise by £560 in the year to February, compared with the average person’s increase of £441. More higher earners reported finding themselves either overdrawn or having to borrow (chart). (3)

Royal London
Source: Royal London Cost of Living Report April 2023

Martin Lewis
The Money Saving Expert has recently made the case for middle-incomers just outside the financial support threshold. He reminds us, and ministers, that energy prices will remain high long after current energy support stops. (4)

NOTE. There is almost universal agreement that the rising cost of living is affecting the living standards of most groups in society. At Citizens Advice we naturally advocate for those on lower incomes whose lives and families may be most at risk in a cost crisis. This in no way reduces our mission to inform and support everyone who asks, whoever they are, whatever their problem.

Post updated 25/05/23 adding reference to bond markets.

1 Online Housing Statistics, Citizens Advice, April 2023
2 Still coping? Resolution Foundation, 27/04/23
3 Cost of Living Report, The higher earners paradox, Royal London, 21/04/23
4 Laura Kuenssberg on Sunday, 21/05/23

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