Over half (53%) of mortgage borrowers said their housing costs have increased in the last year by an average of £327 a month. Among single mortgage borrowers, the rise was £252 a month with those living alone paying £298 a month more, according to research from Royal London.
For renters, almost eight in ten (72%) single-person households said their housing costs had risen in the 12 months to February 2025, with an average increase of £218 a month.
Those renting privately saw the steepest rise averaging £304 a month, with housing costs for local authority or social housing rising by an average of £159 a month.
Royal London’s latest Financial Resilience Report found that large numbers of people across the UK are facing financial hardship.
One of the most concerning findings is that one in five adults have less than £100 in cash savings, a figure that has remained unchanged for two years. With little or no financial buffer, these individuals are highly vulnerable to rising costs and unexpected expenses.
The report also found that one in 10 (9%) are on the brink of a financial crisis and 2% are already in one.
Mid-life adults (30–49-year-olds) are the worst affected age group, with 16% either in or close to a financial crisis and only 41% of mid-lifers satisfied with their current standard of living.
There were some signs of recovery in some people’s finances. This year, 59% of adults said they had money left over at the end of the month compared to 49% last year, and there was a small rise (£15,864 per person compared to £15,549 in 2024) in the average amount of people’s cash savings.
However, that improvement is not universal. Among families with children under 18, 47% said they were close to financial crisis or feeling the pinch. Many are already cutting back by reducing heating (36%), curbing social and leisure activities (33%), or cutting back on meals (11%).
The income squeeze has also impacted savings and retirement planning. Encouragingly, only 5% of adults reduced or stopped pension contributions in the past year.
However, 43% of adults admitted that their pension or retirement plans have been affected by the higher cost of living. The report also reinforced the need to encourage people to engage with their pensions, as 69% of adults do not know how much is in their defined contribution pension pot, while 52% have not thought in the last year about how much money they may need for retirement.
Sarah Pennells, consumer finance specialist at Royal London, said: “We have seen some signs of an improvement in people’s finances in the last year, but those still struggling with higher bills and food prices face difficult decisions as they try to rebalance their household finances.
“We’re seeing a big divide between those who can absorb higher costs and those making daily sacrifices—cutting back on essentials, dipping into their savings, or going overdrawn at the end of the month.
“After more than three years of rising costs and higher bills, we’re seeing the impact on people’s longer-term finances, as well as their day-to-day spending. While it’s encouraging that some people have been able to start to build up their savings, it’s very concerning that one in five have less than £100 in savings – exactly the same percentage as in March 2023 when we first asked this question, and unchanged for the past two years.
“For those feeling the squeeze, it’s worth checking if you’re eligible for state benefits, grants or help from local councils. Many miss out simply because they’re unaware of what is available. Reviewing direct debits and subscriptions can also help — save money, and even the smallest changes can add up over time."
