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13 rate rises in a row is unlucky for lots of us

David Hilferty, Social Justice spokesperson at Citizens Advice Scotland in The Herald on Saturday 1 July

Last month the Bank of England announced its 13th interest rate hike in a row, in a move that is not so much unlucky for some as unlucky for many.  

Unlucky, for example, for people on variable rate mortgages facing higher monthly payments, or people with fixed rate deals that will expire soon.

Unlucky too, for people who, through no fault of their own, have fallen into debt to simply keep up with essential bills like food, shelter, and energy.  People taking on new debt on these circumstances could see that line of credit cost even more. It becomes a vicious cycle, trapping people in rising, more expensive, debt.

Data for Citizens Advice Scotland’s online advice pages for May show a surge in demand for our online mortgage calculator, as well as other aspects of housing advice. Pages offering advice to people facing homelessness, repossession actions from their lenders, or eviction from their home once it has been repossessed have all seen big increases, in the latter case by a staggering 341% compared to last May.

People facing an increase in their monthly mortgage costs are also seeing high costs elsewhere, whether that is their energy bills, food shop or transport costs. None of this is happening in a vacuum, many people will prioritise paying their mortgage but increasing demand for advice around repossessions and evictions is really concerning.

People don’t like talking about these things in terms of “luck” but the reality is many people are facing increases to their monthly payments because of events beyond their control.

In one example of the type of case CABs have been dealing with, a disabled man sought help from an East of Scotland CAB for a range of cost-of-living related issues. The biggest change to his outgoings is mortgage costs, he is on a tracker mortgage, so costs change in line with interest rates. His current rate is 7.79 per cent and his monthly payments have gone up by over £110 per month, he is in a deficit every month.

In another case, a former NHS nurse living with a brain injury sought help from her local CAB after her monthly mortgage payments increased from £400 to £707.

What I’m describing as “luck” is really a lack of control. That’s one of the big things about seeking advice from a CAB. Even if you don’t get the result you want, the knowledge of understanding your rights can be empowering, reduce stress and anxiety. At least you know what is out there and what is coming. It puts you back in control.

In one instance a CAB helped a pensioner who cared for her husband and was dealing with increased payments on their mortgage and energy bills, as well as council tax debt. They were obviously extremely anxious and upset when they came to the CAB.

The CAB carried out a benefit check and identified the husband as being eligible for Attendance Allowance and Pension Credit. Backdated payments for both came to over £2,000 in addition to their monthly entitlements going forward, which will see them in much better shape to deal with higher bills and payments.

The clients described the help from the bureau as “life-changing”.

They’re not “lucky” ones. They just got the advice to access the support they were already entitled to, but during this crisis people may see a change in fortune having sought advice from the CAB network.