Homeowners see finances improve as tenants in the private rental sector saw a sharp deterioration in their budgets
Homeowners reported improvements to their finances in January – as tenants in the private rental sector saw a sharp deterioration in their budgets, research found.
Nearly four in 10 (39%) Britons believe their finances will get worse in 2013, compared with a quarter (25%) who expect their situation to improve, marking the least downbeat reading in four months, financial information company Markit said.
However, the improved start to 2013 was “overwhelmingly” driven by people who either own their own home outright or have a mortgage. By contrast, people living in private rental accommodation reported the strongest deterioration in their finances since the survey started in 2009, with around two-fifths noting that their budgets had worsened.
The study comes after a private rental index from lettings network LSL Property Services recently noted an uplift in the proportion of rent that is late or unpaid as tenants struggled to balance their budgets.
Tenants have been faced with soaring rents in recent months due to strong demand in the sector, while energy price hikes and increased food costs will place further pressure on their finances in the coming months.
Meanwhile, there has been some good news for mortgage holders with signs of an improvement in the mortgage market following the introduction of a Government scheme in August to boost lending, which has resulted in mortgage lenders slashing their rates.
Almost one third (31%) of people across the study said they had seen their finances worsen in January, compared with 6% who saw them get better, Markit’s latest monthly household finance index said.
Overall, Markit’s index picked up to 37.7 in January, from a seven-month low of 36.8 recorded in December. Readings above 50.0 signal that people’s finances are improving and those below it a deterioration.
Tim Moore, senior economist at Markit and author of the report, said: “The unfavourable economic backdrop and squeezed incomes are clearly making it difficult to keep household finances on an even keel.
“Overall, however, households are having to make hay while the sun isn’t shining, and January’s upturn from the lows of 2012 suggests that some gradual financial improvements are being made in spite of fragile conditions across the UK economy.”
Article courtesy of Money UK
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