• Impending energy price cap rises and ‘higher for longer’ interest rates risk pushing millions to the limits of their adaptive capacity

• The new Equifax UK Market Pulse Index, a diagnostic tool for financial health, flatlines in depletion of pandemic-era savings

• Higher-income households seek debt relief as new IVAs involving homeowners grow

• 2026 Financial Health Report highlights a new era of proactive inclusion, driven by advanced data and analytics

 

London, 7th May 2026 – New analysis from credit reference agency Equifax UK shows that depleted financial buffers in UK households could be set to collide with a potential energy shock and continuing cost-of-living pressures, as its new Market Pulse Index of financial health flatlines [and UK consumers report a £13k+ gap between desired and actual comfortable savings]. 

The latest Equifax Financial Health Report reveals a nation moving from a world of reactive survival to a new era of proactive inclusion powered by accelerated technology and tighter regulation, with consumers successfully navigating through adaptive strategies. 

Mortgage lending saw a rebound of 14.9% growth in 2025 compared to 2024. Significantly, 11% of all new mortgage lending exceeded 35-year terms, up from 3.5% from 2022, as consumers adapted to manage monthly repayment levels. 

While outstanding UK credit card debt reached a record £79.2 billion in 2025, consumers also demonstrated strategic credit use, favouring interest-free periods and adapting spending habits. This adaptation contributed to a flourishing £7 billion annual re-commerce sector, with 8% of consumers each month sourcing from second-hand vendors and over 5% selling items to supplement their incomes.

‘Adaptation exhaustion’ 

However, Equifax UK analysis suggests UK consumers’ capacity to absorb further economic shocks has diminished and given way to “adaptation exhaustion”. One in three UK consumers say they would want £20,000 in their bank to feel more secure, according to Equifax research2, but this compares to an average of just £6,1883. 

Meanwhile a new diagnostic tool, the Equifax Market Pulse Index, settled at 60.4, higher than in 2019 but lower than the 2021 stimulus-fuelled peak, signalling a depletion of pandemic-era savings. The Index is a comprehensive, multi-faceted measure of consumer financial resilience that synthesises a wide array of anonymised credit, banking, and consumer behavioural data. Designed to go beyond traditional credit scores, it evaluates key indicators of financial resilience, including savings buffers, debt burdens, and the ability to withstand unexpected shocks, and using a scale where a higher score indicates greater financial health and overall national resilience. 

This measure comes as the average amount owed on unpaid utility bills was sustained at £600 throughout 2025, a significant jump from £350 in 2020. Furthermore, recent global events are now projecting an 20% increase in the July 2026 Ofgem price cap4, which could see the typical annual dual-fuel bill for a household reach an estimated £1,973. 

Meanwhile, households are also facing the prospect of ‘higher for longer’ interest rates. This follows nearly 300,000 mortgage borrowers having already switched to interest-only products or extended mortgage terms between July 2023 and October 2025 as a coping mechanism.

	2025 MPI score	Vs 2019 baseline (pre-pandemic)	Vs 2021 peak
Baby boomers (ages 62-80)	67.88	+2.88	+0.48
Gen X (ages 46-61)	61.68	+2.83	-0.21
Millennial (ages 30-45)	56.11	+2.10	-1.30
Gen Z (ages 14-29)	50.84	+3.63	-0.29

 

Paul Heywood, Chief Data & Analytics Officer at Equifax UK, said: “The UK consumer's 'Great Recalibration' in 2025 was a triumph of adaptive resilience, but we could now be at a turning point. 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.”

Financial inclusion and structural inequalities 

The report data also reveals structural inequalities. Personal insolvencies increased 10% in 2025, with a significant shift towards higher-income households and homeowners (17% of new Individual Voluntary Arrangement (IVAs)) facing distress, as mortgage costs now exceed average rent for IVA entrants. A gender gap in financial health related to life stages also emerges in the Millennial bracket (ages 30-45), impacting women’s financial resilience, while this age group also pays 19.9% more in mortgage repayments than ages 62-80.

More optimistically, Open Banking adoption has surged to 16 million users (or one in three UK adults)5, enabling fairer, real-time affordability assessments and eliminating blind spots for consumers with ‘thin’ credit files. AI-powered tools, such as Collect 360 for managing debt, are facilitating earlier engagement, and the Equifax “Tell Us More” programme has introduced 32 new categories to identify and provide support for individuals in vulnerable situations. 

David Bernard, General Manager UK&I at Equifax, said: “Since the global pandemic, we have tracked a period of high volatility, from the ‘mortgage shock’ of 2023 to the cost-of-living spiral that forced millions to re-evaluate their financial security. But the positive news is, we are moving to a world of proactive inclusion, thanks to more robust data and analytics that can be used in technology and consumer regulation. Despite new challenges ahead, this combination will help businesses better understand the ever-changing financial landscape and continue to work to build a credit market that better serves all consumers and helps them live their financial best.”

Key trends and structural shifts identified in the Equifax 2026 Financial Health Report:

• 'Energy Shock 2.0' looms: Typical annual dual-fuel bills are projected to surge by 20% to £1,973 in 2026, while defaulted utility balances have been sustained at £600 throughout 2025 – a jump from £350 in 2020.

• The 35-year mortgage becomes a norm: Following a period of higher interest rates in the UK, 11% of all new mortgage originations now exceed 35-year terms, a shift as consumers elongate debt for affordability.

• Credit cards as a cash-flow staple: Within the broader unsecured credit ecosystem in 2025, and despite a record £79.2 billion in outstanding credit card debt (15.1% above pre-pandemic levels), consumers are strategically leveraging interest-free periods and rewards for budgeting, not just distress.

• The £7 billion re-commerce revolution: Trading down is now mainstream, with 8% of consumers each month actively sourcing from second-hand vendors and over 5% selling items to supplement their incomes, making the circular economy a significant pillar of household financial management.

• The homeowner IVA spike: The share of homeowners entering IVAs grew by 70% in just two years (moving from 10% to 17%). 

• The Millennial gender gap: The report reveals a fracture between men and women aged 30-45. Triggered by the financial friction of family formation and maternity leave, females’ relative debt burdens spike, creating a lifelong divergence.

 

Sources:

1. All data, unless otherwise stated, available in the Equifax Financial Health Report 2026, published 7th May 2026

2. Calculated based on an approximate UK adult population of 48 million (derived from 1 in 3 UK adults using Open Banking data, FHR p39).

3. myEquifax survey of 933 UK customers

4. Bank of England and Office for National Statistics

5. Cornwall Insight: ‘Fall in Wholesale Market Lowers Price Cap Forecasts, but Big Rises Still Expected in July’

6.  FCA: Open banking: a year of progress