Rising mortgage rates in the UK have likely driven around 320,000 people into poverty, nearly 100,000 more than official statistics indicate, according to a report

released on Thursday.

Although mortgage rates have decreased from their peak of over 6% for a typical two-year mortgage last year, they still hover above 5%, significantly higher than pre-2022 levels when interest rates began to climb sharply.

The report, published by the Institute for Fiscal Studies and funded by the anti-poverty Joseph Rowntree Foundation charity, highlights that the increase in borrowing costs has impacted more people than commonly believed. This discrepancy arises from the limitations of official household income data, which use a single average interest rate for all households.

"This has led to the headline statistics understating the number of people in poverty, something set to worsen in next year’s data," stated Sam Ray-Chaudhuri, a research economist at the IFS.

"Poverty rises have also been understated due to the unequal impact of inflation," he added.

Data from the Office for National Statistics shows that inflation peaked at 14.3% for households in the lowest income decile, compared to 11.3% for those with the highest incomes.