RISE IN UK MORTGAGE RATES HAS FORCED 320,000 ADULTS INTO POVERTY

Fri 26 July 2024:

A report by the Institute for Fiscal Studies (IFS) reveals that official statistics on British housing costs from 2022 to 2023 may have led to a significant underestimation of poverty rates. The mismeasurement could mean the actual poverty rate is one-third higher than reported.

Impact of Inflation and Mortgage Interest on Poverty

The IFS report states that official poverty figures only reflect about two-thirds of the 320,000 individuals pushed into poverty by rising inflation and increased mortgage interest payments. “This research shows the cost-of-living crisis wasn’t felt equally by everyone,” noted Peter Matejic, chief analyst at the Joseph Rowntree Foundation, which funded the research.

__________________________________________________________________________

https://whatsapp.com/channel/0029VaAtNxX8fewmiFmN7N22

__________________________________________________________________________

Underreporting Affects Lower-Income Households and Pensioners

The report highlights that the official data failed to account for the higher energy and food prices impacting lower-income households and pensioners. Consequently, higher inflation could push 210,000 more households, including 80,000 pensioners, into poverty.

Mortgage Interest Payment Mismeasurement

The official statistics also did not accurately measure the increasing spread of interest rates as some households transitioned from fixed rates in 2022-2023. This mismeasurement resulted in poverty being understated by 70,000 people. As more fixed-term mortgage contracts switch to standard variable rates, this number could rise to 150,000.

Potential Policy Implications

Sam Ray-Chaudhuri, a research economist at IFS, warned that this mismeasurement has led to poverty statistics that understate the true extent of poverty, which could affect policy decisions. “Poverty statistics that hide the real scale of these increases risk policymakers missing what is truly happening to poverty,” Ray-Chaudhuri emphasized.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

______________________________________________________________

FOLLOW INDEPENDENT PRESS:

WhatsApp CHANNEL
https://whatsapp.com/channel/0029VaAtNxX8fewmiFmN7N22