High interest rates, expected to peak at 5.5% in September, are stretching homeowners’ budgets, with the average household expecting a £220 per month increase when they renew their mortgage deal, according to a study from flexible jobs platform Indeed Flex.
With 800,000 fixed-rate mortgages due to expire in the second half of 2023, along with 1.6 million in 2024, around one in six of the UK’s 15 million homeowners are set to see their repayments jump before the end of next year.
To cushion the blow, more than half (54%) are cutting their spending, around a third (34%) are saving more, and just under a third (30%) are taking on extra work.
Novo Constare, CEO and co-founder of Indeed Flex, told HR magazine that financial stress and the burden of secondary employment could threaten employees’ wellbeing.
He said: “A lot of workers are already feeling stressed financially, and it is important that HR professionals keep an eye out for staff who appear to be struggling.
“Money worries can take a huge toll on people’s mental health, so it is important that HR teams do what they can to help staff feel supported.”
For Shakil Butt, founder of HR consultancy HR Hero for Hire, the problem exacerbates issues that have been building over the last two years where employers are caught between budgets and employee needs.
Speaking to HR magazine, he added: “Those that take on extra work to cope will be at greater risk of burning out leading to sickness absenteeism, presenteeism and or performance being affected.
“For organisations based in locations with high rent like London, that are insisting on a ‘bums in seats’ policy, they may find that opting to allow employees to work from home helps their workforce lower their household spend.”
A more relaxed stance towards hybrid working, he said, would eliminate some of employees’ commuter costs, and allow some employees to live further away from high-cost city zones.
“[Housing costs] are often the average worker’s biggest outgoing,” he said.
“This can all feed into the organisation’s attraction and retention strategy.”