It pays to open up about mortgage pain

This article is the latest part of the FT’s Financial Literacy and Inclusion Campaign

Middle Britain is braced for an onslaught on its household finances. The Bank of England has projected that 1mn UK households face paying £500 or more extra a month as they roll off fixed-rate mortgage deals between now and 2026.

Average mortgage rates have hit a 15-year high, surpassing levels seen in the aftermath of the Truss-Kwarteng “mini”-Budget last year. Lenders are standing by to help struggling borrowers but many hope to budget their way out of trouble by relinquishing luxuries from their low-rates-era lifestyle.

Trying to decide what will be cut — and by whom — is complicated further by the British reluctance to talk openly about money, elevating the potential for disagreements at home and within families.

Financial tensions within relationships are of course nothing new, but the squeeze on budgets is widening existing faultlines. When I asked people about their budgeting gripes this week, simmering levels of financial resentment were already obvious.

Top of the list is wage rage. Wishing a spouse or partner would push for a pay rise or promotion or get a better-paying job is seen as the solution by many (better not tell Bank of England governor Andrew Bailey, who is troubled by UK pay growth hitting a record high). Even so, a higher rate taxpayer would need a gross salary increase of more than £10,000 to fill a £500-a-month hole in their budget.

Profligacy is another common moan. Many tell me their own efforts to economise are being undone by a higher spending spouse — men and women complained equally about this, although the sources of tension varied.

A linked issue was how to split rising bills if one partner earns more than the other. “Dividing our expenses 50:50 is so unfair when he makes more than double what I do,” said one person (I heartily agree).

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As pressures grow, so will the need for difficult conversations at home. People tell me they suspect their partners of having secret savings or credit card debts or confess to such concealments, fearing this may weigh on future mortgage refinancing options.

It is also notable that mortgage-driven budgeting pain is skewed towards younger generations who have taken on much bigger debts to get on to the property ladder. As first homes are often followed by first babies, rising childcare costs add significantly to the burden.

“It feels like a big snowball is rolling down the mountainside towards us, and we’re just braced for it to hit,” says one young couple. Agonisingly, they know their mortgage repayments will jump from £800 to £1,400 a month when their fixed-rate deal ends in November; a timeframe that unfortunately coincides with the arrival of their first child.

Older homeowners, by contrast, are more likely to be mortgage free. Plenty will have already helped their adult children to buy a home; offspring unable to balance budgets may approach the Bank of Mum and Dad for a bailout, risking further financial disagreements between siblings or generations.

Vicky Reynal, a psychotherapist who specialises in helping people resolve financial problems, notes that conflict often arises from an imbalance somewhere. This could be one sibling receiving more financial help than another; one person within a relationship earning or spending more, or even a power imbalance in financial decision making.

Arguments might appear to be about money on the surface, she says, but they’re really about what money has come to symbolise: namely, our desires — and fears — around security, power, control and love.

Talking more openly about money is one way of easing the tension. Tamsin Caine, a chartered financial planner at Smart Divorce, works with couples whose relationships with money (and each other) have reached breaking point. “It’s very common for one person to deal with the money in a relationship, but this creates a whole extra layer of fear for the other person when couples divorce,” she says.

Of course, the financial pressures are far more acute for singletons. While a partner’s spending habits could be a source of friction, at least you can face the mortgage music together. We might struggle to find the right words, or the right time to confront our money problems when they surface. But the more you do it, the easier it becomes.

As challenging as it is to find a good compromise or a better balance, open conversations about money and financial decision-making now will help everyone when interest rates recede.

The writer is the FT’s consumer editor and the author of “What They Don’t Teach You About Money”. claer.barrett@ft.com