UK Household Debt: Q4 2025

Introduction

The House of Commons Library has just released its latest report and economic indicators on UK household debt. Running until the end of 2025, the economic indicators go back to 2007 and are therefore a useful trend analysis tool.

That said, recent global shocks are likely to reverberate and impact on UK trends in 2026, which are too volatile to predict at this point.

Overall Trends

According to the report, UK household debt peaked in Q3 2008 at 155.8% of income. Since then household debt has been on a downward trend, now standing at 117.5%.

The Standard Variable Rate (SVR), which is the baseline for mortgages, peaked in 2023/24 at 8% and has now been falling to its current rate of 6.6%.

Individual insolvencies have hovered around 30,000 a quarter in England and Wales for the last four years. There are peaks and troughs between 25,000 and 33,000 but no long-term trends in either direction.

Influencing Factors

The report purely gives the numbers and leaves it to the politicians to speculate on why trends have occurred! But at Saascoms we are not politicians, so let’s give it a go…

• Financial Crash 2008 – led to a contraction in lending, especially in the sub-prime market. Banks and Building Societies have taken a more prudent approach to lending, reducing the opportunity for households to increase debt.
• Low Interest Rates – from 2009 to 2022 interest rates have been at an all-time low. This has enabled households with mortgages and loans to pay back quicker (reducing debt), reduced lending rates (meaning more manageable debt) and the opportunity for business to lend and invest at low rates (creating jobs).
• Consumer Confidence – although the financial crash led to low interest rates, it also shattered consumer confidence, which has never really recovered. And just when there were green shoots, Covid and then Ukraine destroyed them. As a result, households have been wary to take on debt due to economic uncertainty.
• Regulation – the FCA targeted Pay Day Lenders (Wonga), high street retailers (Brighthouse and Perfect Home) and financial products it deemed to have excessive interest rates. This has restricted the ability of households with a low propensity to pay back debt to access loans or credit.

What’s Next?

With government, corporations and households all responsible for managing UK household debt, at Saascoms we believe it’s about having the right tools. Such as Resolution, our self-serve debt management portal which launched last year.

For customers this means managing their debt on a platform which enables payments and setting up payment plans. Also contacting the DCA, conducting an Income and Expenditure review or being signposted to a support organisation.

For clients this means monitoring live payments and producing detailed reports. Plus the option for one to one or one to many communications – all from a single platform.