As the cost of living crisis maintains to erode people’s wages, it has come to light that about 2 million households have defaulted on at least one large bill leading up to the holidays.

An estimated 1.9 million families failed to make at least one mortgage, rent or loan payment

Missed payment rates are typically lower in the weeks preceding the holiday season and peak in January when many households must repay their Christmas spending. Finance and energy sector boardrooms will find the Which? Statistics are unsettling, as it predicts a substantial wave of payment defaults could occur in the coming months.

In January 2022, 2.5 million families were reported to have missed at least one payment on a substantial bill, up from 1.7 million in January 2021. As the UK enters a recession, mortgage and rent expenses increase, and the energy price guarantee becomes less generous in April, consumers will face further financial constraints in 2023. Leading to an increase in defaults, the report predicted.

Perhaps unexpectedly, 2.3% of families did not pay their energy bill

Followed by 1.8% of households that did not pay their council tax.

Renters were more likely to have needed to catch up on a mortgage payment. 3.1% of respondents reported needing a loan or credit card payment.

Rocio Concha, head of policy at Which?, stated, “We’re concerned that many more individuals may face financial difficulties in January, as credit repayments mount and the cost-of-living issue continues to bite.”

“Because so many people are experiencing financial difficulties, Which? Is urging firms in vital industries such as food, energy, and broadband to do more to assist customers in obtaining a decent deal. And avoid unnecessary or unjust expenses and fees during the current economic crisis.”

The Bank of England warned about “substantial pressure” due to missed payments

In 2023, the average monthly mortgage payment is projected to increase to £1,000 (from £750), corresponding to around 17% of pre-tax income for almost 4 million households. The Trades Union Congress said earlier this month that 2022 has witnessed the steepest decline in actual earnings since 1977 and the second worst since 1945.

Salaries decreased by £76 per month on average in 2022 due to salaries not keeping pace with inflation.

Before a year ago, the average household spent approximately