Monthly mortgage payments in the UK have jumped by 8.7% this year as interest rate rises begin to bite, a new analysis of consumer spending has revealed.
Yet renters have felt the effects of inflation on their bank accounts even more acutely in the past 12 months, experiencing a 12% increase in monthly payments on average.
The revelations were made by Abound, formerly known as Fintern, a lending service that uses open banking and artificial intelligence (AI) to save borrowers money. Abound’s insights come from analysing real time spending of its customers.
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Gerald Chappell, CEO of Abound, said that the figures were concerning, but stressed more time is needed before the full picture is clear.
Chappell told LondonLovesProperty.com, “This is a dramatic rise in housing outgoings. Whilst renters have seen a bigger increase this year, the effects of interest rate increases will take more time to directly hit people with mortgages, who often fix rates for a few years.
“The picture for mortgage borrowers is complex and has been getting worse for some time, but this data shows we should not forget the millions of renters being hit by large rises during this economic turbulence.
“Pain for mortgage holders is also expected to get worse, with payment increases of up to 60% expected as fixed rates roll off”
Abound uses Open Banking and AI tech to build a complete picture of a person’s financial health by analysing their entire spending and income history, which traditional lenders tend to ignore in favour of a credit rating. This allows them to offer better interest rates than their customers can typically find elsewhere.
This approach allows Abound to offer more affordable loans with fair rates and has seen their customers miss repayments 75% less than the industry standard. Abound keeps all bank account data anonymised and customers consent to it being assessed as part of the service.
Abound has been growing rapidly since it was founded in 2020 as borrowers seek out better deals compared to other, more traditional, loan providers with higher lending rates.
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