New research highlights varied impact of cost of living crisis across Wales

As rising interest rates push up mortgage repayments, households with high mortgage loan-to-income ratios are particularly exposed. Looking at those who took out mortgages between 2018 and 2021 with a loan four times or more than annual household income, Cardiff stands out as the area with the highest proportion and number of such mortgages, at 29.7% of all recent mortgage-borrowers, or 3,742 households. 1,767 such households in Newport are in this position. While Llandudno (22.9%) and Swansea (22.0%) have lower proportions of households in this position, the number of affected households remains significant: 1,229 in Llandudno and 1,640 in Swansea.  

In response to the cost of living crisis, in 2022 the Welsh Government introduced a £152m package of measures to help local authorities deliver support to their communities. But just 16% (£25m) of this was discretionary funding for councils to allocate themselves, while the remainder was for council tax relief, a broad-based measure. CPP is calling on the devolved governments of Wales, Scotland and Northern Ireland to provide more discretionary funding for councils, similar to the Household Support Fund available to English local authorities, to spend as they judge best to support their residents.  

CPP also calls for better data collection and sharing by councils and other local partners to enable local leaders to make better informed decisions about how to target support. 

Ross Mudie, Research Analyst at CPP and report author, said: 

“Rising living costs are adding pressure to virtually all households in Wales, but our analysis reveals significantly different pressures in different parts of the country. 

“Renters, particularly those on low incomes, are being squeezed by high rents and a lack of available properties for those claiming housing benefit. Almost a third of all recent mortgages taken out in Cardiff are four times the size of homeowners’ incomes, meaning rising interest rates will have serious knock-on effects. For those in small towns and villages, it is high rates of fuel poverty and low paid jobs that leave people vulnerable to the impact of rising prices – although a lack of available data makes it difficult to pinpoint these pressures in more detail.  

“Local authorities know their communities best, so the Welsh government must provide more flexibility in how funding can be used to target the support that is most needed. It must also urgently update local area poverty statistics, so that local and national policy can better understand and respond to the situation on the ground.”