An increasing gap is developing between older, more financially secure homeowners and those who are struggling, namely those aged 30 to 49, who bought their homes recently and younger people who can't get on the property ladder.
Many people in the 30-49 age group are 'mortgage prisoners', trapped in their current mortgage deal and unable to switch when rates increase. This group has the greatest housing related costs, spending on average £186 a week, compared with the national average of £135.
The Quarterly Consumer Report also reveals that home ownership is increasingly out of reach for first-time buyers with rising rents making it harder for people to save for the large deposits needed. More than half (54%) of people under 30 who don't own a home are worried about getting on the property ladder.
Lenders have also increased mortgage arrangement fees, which have risen by around 60% in the past eighteen months to an average of £1,472 in August 2012.
The findings come at a time when banks and building societies are being given access to cheap funds through the government's Funding for Lending Scheme.
But more than 1.6 million people with mortgages have been hit by increasing Standard Variable Rates on their mortgages, meaning they are now paying about £400m a year extra despite the Bank of England base rate remaining unchanged for more than three years.
Which wants the government to ensure lenders that have been given access to cheap finance pass this on through lower borrowing costs to help all borrowers - not just those with significant equity – amidst fears that the Funding for Lending Scheme could widen the gap between secure homeowners and those who are struggling through no fault of their own.
Which? executive director Richard Lloyd said: “'The housing market is failing not just one but two generations of consumers, with many mortgage prisoners trapped on their current deal and young people excluded from the housing market altogether.
“The Chancellor must put tougher obligations on banks that get cheap finance through the Government's Funding for Lending Scheme so that more is done to help those who are struggling through no fault of their own, and especially to ensure that mortgage prisoners and first time buyers can benefit from lower borrowing costs.”
The consumer champion is also asking the government to publish its expectations for the scheme and what safeguards are put in place to ensure that banks pass on cheap funding to consumers.
It also wants banks to publish details of their mortgage lending using FLS and to stop increasing arrangement fees which have risen by approximately 60% over the last 18 months to an average of £1472 in August.
FLS, launched in August, has been taken up by 13 banks and building societies and includes five of the six biggest lenders – HSBC being the exception.
The group of 13 lenders represent 73% of the market and £1.2 trillion of lending.
