Longer home loan terms and rising bills point to pressure on borrowers
UK households may have less capacity to absorb further financial pressure as savings buffers weaken and energy costs threaten to rise, according to new analysis from Equifax UK.
The credit reference agency said its latest Financial Health Report showed that consumers had adapted to the cost-of-living squeeze by changing borrowing and spending behaviour. However, it said this flexibility may now be giving way to “adaptation exhaustion”.
Mortgage lending rose by 14.9% in 2025 compared with 2024, with data also showing that 11% of new mortgage lending was written on terms of more than 35 years, up from 3.5% in 2022, as borrowers sought to keep monthly repayments manageable.
According to the report, UK credit card debt reached £79.2 billion in 2025. Equifax said consumers were making greater use of interest-free periods and adjusting spending, while second-hand buying and selling had become more common. It estimated the annual re-commerce market at £7 billion, with nearly four million UK adults buying second-hand goods each month and more than two million selling items to support income.
Equifax said one in three consumers would want £20,000 in the bank to feel more financially secure, while average savings stood at £6,188. Its Market Pulse Index, a measure of consumer financial resilience, stood at 60.4, above the 2019 level but below the stimulus-driven peak in 2021. The company said this pointed to a reduction in savings built up during the pandemic.
The analysis also found that the average unpaid utility bill remained at £600 during 2025, compared with £350 in 2020. Equifax said recent global events could contribute to a 20% increase in the July 2026 Ofgem price cap, taking the typical annual dual-fuel bill to about £1,973.
Borrowers also face the prospect of interest rates staying elevated for longer. According to the report, almost 300,000 mortgage borrowers had moved to interest-only deals or lengthened their mortgage terms between July 2023 and October 2025 as a way to manage payments.
| 2025 Market Pulse Index (MPI) score by generation | |||
|---|---|---|---|
| Generation | 2025 MPI score | vs 2019 baseline | vs 2021 peak |
| Baby boomers | 67.88 | +2.88 | +0.48 |
| Gen X | 61.68 | +2.83 | -0.21 |
| Millennial | 56.11 | +2.10 | -1.30 |
| Gen Z | 50.84 | +3.63 | -0.29 |
| Source: Equifax | |||
“The UK consumer’s ‘Great Recalibration’ in 2025 was a triumph of adaptive resilience, but we could now be at a turning point,” said Paul Heywood, chief data and analytics officer at Equifax UK.
“As buffers dwindle, consumers’ ability to absorb further economic shifts has been diminished and the potential for incoming energy price spikes and sustained pressure from high borrowing costs could push millions to the limits of their adaptive capacity.
“The traditional image of financial discomfort is also changing as asset-rich households and those in their prime working years increasingly grapple with debt due to elevated living and housing cost pressures.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
