Insights ¦ Equifax Financial Health Report 2025

Key Take Aways

1. The UK’s financial health in 2025 is shaped by ongoing economic headwinds, with consumers exhibiting resilience despite elevated debt levels and rising living costs.

2. Full year mortgage originations in 2024 remain 24% below 2022 levels, highlighting persistent recovery challenges within the housing market.

3. Consumer credit behaviour demonstrates increased confidence, with credit card activity surpassing pre-pandemic levels and a notable shift towards higher debt levels.

4. Consumers are increasingly extending mortgage terms (up to 35+ years), reflecting a strategic adaptation to affordability constraints amidst rising interest rates.

5. The credit card market is growing, with outstanding debts exceeding £70 billion, and consumers managing their credit responsibly, as reflected in reduced arrears levels.

6. Buy Now Pay Later (BNPL) continues its significant role, with 36% of consumers using BNPL in 2024 and an average spend of £66 per month.

7. Financial stress persists amid rising essential costs—utilities, energy, and council tax bills—requiring industry collaboration for effective consumer support.

8. Industry opportunities centre on financial education, with the sector urged to increase awareness, especially about benefits entitlement and responsible lending.

9. Addressing the benefits gap (£20 billion unclaimed support) is critical, with initiatives like Tariff Connect streamlining eligibility assessments and benefits access.

10. Bringing debt engagement forward enables earlier intervention, helping consumers avoid escalation, improve recovery rates, and strengthen trust.

11. Digital and AI-driven tools are transforming collections, with increases in online portal usage and enhanced, empathetic communication improving outcomes.

12. Supporting victims of economic abuse through better credit reporting and industry collaboration remains vital, with over 1.1 million women and 1.7 million men affected annually in the UK.

Key Statistics

• Mortgage arrears stabilised and declined in late 2024, with mortgage arrears levels decreasing after a challenging year.

• Average mortgage repayments are over 38% higher than January 2022.

• Credit card debt now exceeds pre-pandemic levels by 4.5%, with an average balance per card at £1,546.

• 11% of mortgage originations in 2024 were at terms exceeding 35 years.

• Monthly typical BNPL spend is £66, with 36% of consumers using BNPL in 2024.

• 92% of consumers wish they had engaged with debt earlier.

• 86% of adults in the UK use online or remote banking.

• 1 in 7 women experienced economic abuse over the past year; nearly 25% of victim-survivors were prevented from leaving abusers due to financial control.

• In the UK, 4.1 million women and 1.8 million women in minority groups experienced economic abuse in 12 months.

• Less than a quarter of social tariff support was utilised in 2024, indicating a significant awareness and accessibility gap.

• The potential economic support from social tariffs via auto-enrolment is expected to deliver over £10 million support in 2025.

• The inclusion of more comprehensive data sharing channels (Open Banking, sharing of utility and credit data) aims to promote fairer credit access.

Key Discussion Points

• The resilience of consumer financial health despite inflationary and economic uncertainties and the importance of sustainable financial management.

• The ongoing recovery challenges in the mortgage market and the implications of extended loan terms for affordability and long-term stability.

• The growth and responsible management of credit card debt, alongside the need for vigilance amid increasing household borrowing.

• The role of BNPL in current financial behaviour and the associated risks, particularly regarding consumer understanding of exposure.

• The significant opportunity for the industry to address the £20 billion benefits gap through improved awareness and streamlined application processes.

• Initiatives such as Tariff Connect exemplify how technology can reduce barriers and facilitate faster access to support.

• The critical importance of early debt engagement to prevent escalation, supported by data analytics and humane communication strategies.

• The transformative role of digital channels and AI in debt recovery and consumer support, with an emphasis on personalised, empathetic engagement.

• The importance of industry-wide collaboration in supporting victims of economic abuse and in reforming credit reporting practices.

• The necessity for a comprehensive approach that includes education, technology, and policy to promote financial inclusion.

• The potential for regulation and new data-sharing legislation to enable better risk assessment and fairer lending.

• The strategic role of financial data and AI in shaping a more equitable, transparent, and resilient financial ecosystem by 2030.

Document Description

This article outlines the UK’s Financial Health landscape in 2025 as detailed in the third annual Equifax Financial Health Report. It examines key trends in mortgages, consumer credit, debt management, and financial inclusion. The report emphasises industry collaboration, technological innovation, and regulatory change as central to addressing ongoing challenges and opportunities. It advocates for proactive debt engagement, improved awareness around benefits, and tailored support for vulnerable populations, including victims of economic abuse, with a forward-looking vision for a fairer, more inclusive financial future.