Nearly a third of people are struggling with mortgage and rent payments, according to ONS data.

It found that the proportion of all adults finding it difficult to afford their rent or mortgage payments has increased to 30%. This rose from 26% from March to June 2022.

Rising interest rates have fed through to higher mortgage rates and, in combination with higher energy bills, many households are seeing their living costs soar.

Rio Stedford, financial planning expert at wealth management business, Quilter, said: “Interest rates have been rising to try and combat rampant inflation. But due to fuel being thrown on the fire during the mini budget, interest rates are projected to rise even further later this year. Lenders have been quick to up their mortgage interest rates on all products, which mean that homeowners with fixed rates coming to an end within the next year or two, will likely see their bills rise considerably when they come to the end of their deal.

“The option of moving to a smaller home to achieve lower monthly mortgage payments is starting to become a real consideration for some homeowners. However, before putting a house on the market, it is worth considering that if a flood of properties all hit the market at the same time, this could end up driving house prices down.”

Quilter has published its three most important tips for borrowers who are struggling with their mortgage bills.

Three top tips to manage mortgage concerns

1.Don’t bury your head in the sand

Lenders will normally write to you within 15 days of a missed payment but if you are struggling with your bill, it is crucial that you talk to your lender before they contact you.

Burying your head in the sand will only make things worse. Mortgage debt is what is described as a priority debt and as the name implies should be prioritised above most other types of debt you have.

2. Work out what you can afford to pay back

Before picking up the phone to your lender, take some time to work out exactly how much you can afford to pay back each month.

There are budgeting tools available online or you could speak to a debt charity or Citizens Advice.

If you have sought help, do let your lender know as showing that you have looked at ways of paying back your debt shows you’re serious about it, and can help avoid repossession orders down the line.

3. Discuss ways of making payments

Lenders have a duty to act fairly with customers who are having difficulties. Having a frank conversation with your lender can help them find a way for you to avoid the problem spiralling out of control.

Lenders might be able to put you on a payment plan based on what you can afford to pay back. This could mean proving options to extend your mortgage term, or if your home is worth more than the mortgage, you might be given the option of adding your arrears to the total amount you owe and pay it back over the lifetime of the mortgage.

Seek advice from a qualified mortgage professional before opting for any plan , as some plans may end up with you paying much more interest over the lifetime of your mortgage.