"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"
- Steve Griffiths - Shawbrook
The average UK adult is £224 worse off each month compared with a year ago, according to new research from Shawbrook.
The lender's Home A-Loan report, which looks at specialist lending and the challenges for current and prospective buyers, highlights that mortgage holders face an even greater shortfall. Their reported monthly deficit stands at £262, higher than the national average.
How people are responding
Despite the strain on household budgets, many are taking steps to manage their finances. The research shows that:
60% have reduced non-essential spending.
One in three (33%) have created or updated a monthly budget.
25% have built up their emergency savings.
19% have switched providers.
17% have taken on second jobs or side hustles.
15% are reducing debt through consolidation or repayment strategies.
Widening financial divide
The report suggests that the combined impact of the pandemic, inflation, and the ongoing cost-of-living crisis has left households split. While 38% of adults report improved financial wellbeing compared with last year, the same proportion say they are worse off.
The proportion of people feeling worse off has fallen slightly from 41% in 2023 to 38% this year, but the figures continue to point to financial pressure. Women and older people are particularly affected. 43% of women say they are worse off, compared with 33% of men, while more than half (51%) of those aged 55 to 64 report that their financial position has deteriorated.
Lender perspective
“The widespread financial pressure facing households today is undeniable, with mortgage holders among the hardest hit,” explained Steve Griffiths, commercial director for retail mortgages at Shawbrook. “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.”
