Key facts
- UK households are showing signs of "adaptation exhaustion" as savings buffers weaken.
- Credit card debt reached £79.2 billion in 2025.
- The average unpaid utility bill remained at £600 in 2025.
- Almost 300,000 mortgage borrowers moved to interest-only deals or lengthened terms between July 2023 and October 2025.
- The savings index in the S&P Global UK Consumer Sentiment Index fell to a two-month low of 40.1 in August.
- Demand for additional unsecured credit rose to 52.0 in August.
UK banks are anticipating a rise in provisions for soured loans as households face increasing financial strain. Analysis from Equifax UK indicates that consumers are experiencing "adaptation exhaustion" due to the persistent cost-of-living crisis, leading to depleted savings and increased debt. The report highlights that credit card debt reached £79.2 billion in 2025, and the average unpaid utility bill stood at £600.
Mortgage lending saw significant growth in 2025, with 11% of new lending on terms exceeding 35 years to manage monthly payments. Approximately 300,000 mortgage borrowers shifted to interest-only deals or extended their mortgage terms between July 2023 and October 2025. Data from S&P Global Market Intelligence shows that UK households ran down savings at an accelerated pace in August, with employment income experiencing its first drop in 40 months.
Despite these pressures, UK Finance reported that mortgage lending grew by over 16% in 2025, reaching its highest level since 2021. The number of mortgages in arrears continued to decline for the seventh consecutive quarter.