Household spending fell during Q2 2025, as inflation picked up again and confidence in the wider economy stayed weak, according to UK Finance’s latest Household Finance Review.
First-time buyer (FTB) numbers fell by 15% and movers by 31% in April 2025, compared with April 2024, but both returned to annual growth in June.
Overall, purchase activity in Q2 was down around 10% year-on-year.
Remortgaging stayed below expectations, with only 61% of “free-to-move” mortgages refinanced in the first half of 2025, compared to 65% in the same period last year.
Credit card lending rose in line with long-term trends, but the proportion of balances bearing interest dropped to 47.5% by May 2025, the lowest on record.
Additionally, data showed that mortgage arrears fell for the fifth quarter in a row, down 3.1% in Q2 to 98,840 mortgages in arrears.
Arrears declined across all groups, including the most serious cases.
Possessions rose 32% year-on-year to 2,140 in Q2 2025, but remained at low levels compared to pre-pandemic years.
Mary-Lou Press, president of NAEA Propertymark, said: “It’s great to see that many people have thought ahead and taken advantage of rising interest rates by saving more during this period of economic uncertainty, especially as first-time buyers now need to save in some cases over £60,000 to step onto the property ladder.
“Considering that the Bank of England has been able to cautiously reduce interest rates to four per cent from August 2025, what’s important now is that we see further encouraging support from the UK Government and all devolved administrations to continue raising the number of property transactions as these play a key role in wider economic growth.”
