- Only 14% of households are worried about debt, but fewer than one in five (19%) are classed as resilient when it comes to their use of it.
- On average, households with debts have monthly repayments of £259 in short-term borrowing, and £775 for the mortgage.
- Across the board, almost half (46%) of debt is used for consumption rather than building for the future.
- When looking at repayments as a proportion of income, only a third of people are resilient (34%), falling to one in five people (19%) among the top fifth of earners.
- Borrowing weighs more heavily on the fifth of households that earn the most – with monthly repayments of £415 and a mortgage of £1,096.
Figures from the HL Savings & Resilience Barometer, September 2025
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“People have been lulled into a false sense of security around debt. Fewer than one in ten (9%) are behind on repayments and bills, so most of the rest feel like they’re on top of things: only 14% of people are worried about their borrowing.
However, delve a little deeper, and people are taking all kinds of risks they aren’t aware of. They’re borrowing too much – and too much as a percentage of their income, they don’t have enough certainty over what these debts will cost, and almost half of it is classed as ‘bad debt’.
There are some key signals to look for, to check whether your borrowing is under control.
The risks
It’s partly about how much you’re borrowing. The fact that the average household with debts has total repayments of £1,034 (including the mortgage) – rising to £1,511 in the top earning fifth of households – shows the burden is fairly substantial.
Then there’s the question of affordability. One key metric is your borrowing as a percentage of your income. The HL Barometer measures this as ‘affordability of debt’ and finds that only a third of people have affordable debts. The more you earn, the more you tend to borrow as a proportion of your earnings, so this falls as income rises.
Certainty over your monthly repayments in future can be vital, especially when they make up so much of your budget. Almost a fifth of debt is at a variable rate (18%) so as a result, just 40% of households are calculated to have enough certainty over future repayments.
In some cases, people will score reasonably according to objective measures, but because of their circumstances, they’re worried about how much debt they’re carrying. While only 14% of people worry about their borrowing, this rises to 28% of those with a mortgage and 25% of people who say they always run out of money by the end of the month.
People will often talk about ‘good’ and ‘bad’ debts, so you need to consider if you’re borrowing for the right reasons too. Debt isn’t inherently a bad thing. There are very sound reasons why households need it, for example taking out a mortgage or a student loan – which will help build their financial resilience for the future. On the flip side, there are some less positive reasons why people borrow – essentially to spend on things they consume. This is the traditional divide between good and bad debt, so it’s not ideal that 46% of it is used to finance spending.
However, it’s not quite as simple as this. A mortgage you can’t afford may be incredibly damaging to your overall financial resilience, so it isn’t always possible to class it as ‘good’ debt. Meanwhile, borrowing to invest, including investing in buy-to-let property, can be far riskier than people realise. So, rather than just dividing it into good and bad debt, you need to consider the overall affordability and include a firm repayment plan which allows for contingencies.
Why aren’t people more worried?
When people consider their debts, they’ll often tend to focus on whether they can pay their monthly bills. If they’re sticking to the minimum repayments on a credit card, this can feel manageable, but they’re overlooking the mountain of debt that can be building as a result.
The more people earn, the more they borrow, and the bigger it is as a percentage of income. Having a larger wage packet may mean they feel secure that they’ll be able to pay it back. However, it’s easy for people in this position to miss how vulnerable they would be if they lost their income for a period, and couldn’t make their monthly repayments.
People will often focus on the fact that borrowing is common, and will look for confirmation among their friends that they’re also in debt. They might tell themselves it’s just part of normal adult life, and so nothing to worry about. In many cases, they won’t want to delve any deeper to see whether their level of borrowing really is normal.
Sometimes people will hide from the full extent of their borrowing. This is especially common with things like buy-now-pay-later, where people focus on the monthly cost of individual debts, and miss the bigger picture.
They may not consider the direction their debt is moving in. The lower someone’s income is, the more of their borrowing is on everyday spending. Among those in the lowest fifth of earners, 73% is for normal spending, in the second fifth it’s 70%, and among average earners it’s 66%. The more people need to borrow to make ends meet, the more debt they build and the more the interest costs. They may be digging themselves into a hole without realising.
What can you do?
If you have expensive short-term debts, like overdrafts and credits cards, you need to pay them down as a priority. It can make sense to move loans somewhere less expensive – like a 0% credit card – while you do this, as long as you don’t use this as an excuse to borrow more.
You’ll need to keep up all the minimum repayments, but it can make sense to pay down the debts with the highest interest rates first – so less of your monthly budget is being spent on interest and more can be focused on debt repayments.
However, it’s important not to use this as an excuse for neglecting other parts of your finances. Some people spend their entire adult life dipping into the red occasionally, and that can’t be a reason to avoid building an emergency savings safety net, investing in an ISA or contributing to a pension.
When it comes to your long-term debts, the priority is to have the kind of mortgage that suits you best, with affordable repayments that provide the certainty you need. As long as you are meeting your mortgage commitments each month, and have wiggle room in your budget, you don’t need to have paid your mortgage off to start considering building resilience in other areas of your finances – including pensions and investments.
The key to managing your debts is to take a step back and ask yourself why you’re borrowing. You may be over-committed, so you need to cut back on regular expenses. In some cases, this will mean small tweaks and in others it could even include major changes, like where you can afford to live.
If there are less structural reasons for borrowing, your debts may be building up because of habits, attitudes or faulty thinking around spending. Current account apps are great for seeing how much you’re spending, on what things and when, so you can consider the danger zones and how to avoid them.
For some people, the problems are more serious, and harder to tackle through money management. In those cases, it’s worth considering debt charities like Stepchange. They can talk you through your options and can help you deal with companies you’re in debt to. It’s difficult to turn things around when they’ve got this bad, but you don’t have to do it on your own.”
