Rising housing costs putting stranglehold on Scots' investment plans

Scots are being strongly encouraged to build up a savings pot when economic conditions improve, after new research has revealed how their financial plans are currently being stymied by the rising cost of living.

Fidelity International says: 'The unknown right now is just how deeply the cost-of-living crisis is impacting us all, and just how much it will hurt our financial futures.' Picture: Getty Images/iStockphoto.

Fidelity International has found that 66 per cent of people north of the Border with £1,000 in assets say the rising cost of rent and mortgages is a barrier to their plans when it comes to investing, hindering their long-term financial goals. It added that the problem is more acute for women, at 68 per cent, compared to 64 per cent of men. The firm added that if Scots saw a reduction in bills and mortgage payments, 40 per cent said they would be able to save more each month.

Additionally, the investment and retirement specialist cited data showing that nearly one million borrowers will have to pay an extra £500 a month or more by 2026 due to interest rates heating up, with nearly another half a million households potentially seeing payments climb by £750 a month.

The Bank of England will make its next decision on interest rates on Thursday September 21, with expectations by some of at least another quarter-point hike after the base rate rose to 5.25 per cent in August.

Emma-Lou Montgomery, associate director for personal investing at Fidelity International, commented: “Household budgets are incredibly difficult to manage right now. Both homeowners and renters are seeing their monthly outgoings rocket, as higher interest rates push up the cost of borrowing.

“The good news is that the rate at which inflation is increasing is starting to ease, and this should eventually reduce household outgoings. When people start to see these costs coming down a little, they will be more able – and more inclined – to start putting something aside into their savings and investments again. And that ability and drive to save is really important – because it’s fundamental to everyone’s future financial security.

“The unknown right now is just how deeply the cost-of-living crisis is impacting us all, and just how much it will hurt our financial futures. Taking steps today, regardless of how small they feel, will go some way towards easing the financial challenges we’re all going to face in the years ahead.”