The average UK adult is now £224 worse off each month than they were this time last year, according to latest research from Shawbrook.
Shawbrook’s Home A-Loan report, which explores specialist lending and the struggles facing current and prospective buyers, finds that this financial pinch is being felt the most by mortgage holders - who report an even higher average monthly deficit of £262 compared to 2024.
Brits respond by taking action
Despite the challenges, many are proactively managing their finances to remain in control. 60% have cut back on their non-essential spending, while one in three (33%) have created or updated a monthly budget. Encouragingly, a quarter (25%) have focused on building up their emergency savings, and others are exploring steps including switching providers (19%), taking on second jobs or side hustles (17%), or reducing debt through consolidation or repayment strategies (15%).
The financial divide deepens
The compound impact of the global pandemic, inflationary pressures and the ongoing cost-of-living crisis has greatly impacted people’s financial situation in recent years. 38% of adults reporting improved financial wellbeing compared to last year, but the same number say they are worse off - suggesting a widening gulf in financial resilience.
There is a slight decrease in the percentage of people feeling worse off compared to last year, when 41% of people felt they were financially poorer than they were 12 months previously, but it’s clear that consumers continue to feel the squeeze on their household and personal finances. Women and older people remain disproportionately affected - with 43% of women report being worse off compared to 33% of men, and over half (51%) of those aged 55-64 saying their situation has worsened.
Steve Griffiths, Commercial Director for Retail Mortgages at Shawbrook, said: “The widespread financial pressure facing households today is undeniable, with mortgage holders among the hardest hit. However, what is positive is seeing people take proactive steps to improve their financial resilience in all kinds of ways. Amid rising costs and declining affordability, tailored guidance and specialist lenders are becoming ever more important, especially for first time buyers navigating a tougher landscape.
“With the right support, borrowers can still achieve their home ownership goals. The key is recognising that a one-size-fits-all approach is just not fit for purpose, and a more personalised strategy is essential to support different types of borrower with their ambitions.”
