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Over a fifth of families with children at home are forced to take out a form of payment holiday

Households with children at home are feeling the financial strain of lockdown more than most, our latest Tracker shows…

Tom Harrison
Content writer
2
minute read
posted 4 JUNE 2020

Over a fifth (21%) of families with children have had to request some form of payment holiday to offset the financial impact of the coronavirus pandemic.

Within this group around 11% have asked for a freeze on loan or credit card repayments, with many others requesting a hold on household bills (11%) and mortgage payments (6%).

In addition to payment holidays, more than 1 in 10 families (11%) have also taken on additional debt in order to manage their finances during lockdown, Comparethemarket.com’s latest Household Financial Confidence Tracker shows.

Unsustainable debt levels

The Tracker uncovered a 3% rise in the number of families with children struggling to pay their bills over the last seven days – a proportion that now stands at over a quarter (26%).

And almost a third (30%) of those with kids think they’ll be forced to make spending sacrifices for at least 6-12 months after lockdown ends – compared with 19% of households without children at home.

Overall, childless households are certainly weathering the financial storm more favourably – with fewer than 1 in 10 (9%) having taken a payment holiday throughout the crisis.

Anna McEntee, product director at comparethemarket.com, said:
“These figures will spark concern that families with children are at a higher risk of taking on unsustainable amounts of debt as the economic impact of the pandemic hits their finances, especially as many payment freeze periods are now coming to an end.

“The Government – and indeed many financial services companies – have done a huge amount to help households financially during this difficult time. However, the combination of deferred payments and additional borrowing which will need to be paid back could cause problems for many families in the coming months.

“If interest accrues on these debts, households may be faced with hefty bills they were not expecting. It is important to only make use of payment holidays on mortgages and other household bills if you absolutely have to.”

More workers hit by negative change

The proportion of working households whose employment circumstances have changed for the worse went up again by 4 percentage points from 37% the previous week to 41% – with the youngest group the hardest hit.

In total, over two-fifths (41%) of those who are not confident about paying or managing bills over the coming weeks cited a negative change to their job – such as being made redundant, furloughed or receiving a pay cut – as the main factor.

Among 18-24 year-olds, however, this figure rises to 59% – with almost half of these (48%) saying their income simply isn’t enough to cover their outgoings at the moment.

Nervousness over returning to normal

The number of people who admit they wouldn’t be confident going back to cafes, bars and restaurants once reopened has risen for a sixth successive week, to almost 6 in 10 (56%) – up from 54% last week.

This proportion of nervous households has now shot up 17% since the Tracker began – with most (48%) citing anxiety over not having control over their surroundings.

Anna McEntee, product director at comparethemarket.com, said:
“We have seen household nervousness around returning to society increase for the sixth week in a row. Despite the Government’s insistence that now is the time to get the economy up and running, the UK clearly does not feel comfortable going out to restaurants, cafes and pubs.

“Household financial confidence is still low and many families appear more concerned about paying the bills rather than returning to pre-lockdown life. This hesitancy to get out and spend could have a significant impact on getting the economy back on its feet.”

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