320,000 individuals 'pushed into poverty' as result of interest rate rises

29 Jul 2024

Data published by the Institute for Fiscal Studies (IFS) has shown that 320,000 people have been 'pushed into poverty' as a direct result of rising mortgage interest rates.

The IFS said that many households remortgaging or taking out new mortgages have experienced 'sharp falls' in their disposable income as higher interest rates have pushed up housing costs.

It also stated that despite the Covid-19 pandemic and the cost-of-living crisis, the overall rate of absolute poverty was the same in 2022/23 as it was in 2019/20. However, there was a 'significant increase' in more direct measures of hardship, the IFS found.

According to the Institute, there is evidence that mortgage rate rises have pushed some adults into financial hardship.

Sam Ray-Chaudhuri, Research Economist at the IFS, said: 'Rising mortgage rates have played and are likely to continue to play an important role in many households' living standards. But, perhaps surprisingly, they are not measured properly in the official income data. This has led to the headline statistics understating the number of people in poverty, something set to get worse in next year's data.

'At a time when rates of deprivation and food insecurity have risen substantially, poverty statistics that hide the real scale of these increases risk policymakers missing what is truly happening to poverty.'