UK: Inequality worsens as savings gap grows 25% and homeownership levels fall for low income families

Inequality is on the rise, with the difference in financial fortunes between low and high income families becoming starker over the past year, according to Aviva’s latest Family Finances Report. At the same time, families are also facing increased financial pressure from stalling incomes and savings, combined with rising debt and inflation fears.

  • Low income families have just £95 in savings and investments, compared to £62,885 among high income families, as the savings gap grows 25% annually
  • Overall, UK families’ savings have fallen to the lowest level in 18 months as typical incomes decline
  • Homeownership among families falls to lowest level in four years (64%), with low income families worst off: 41% are homeowners compared to 90% of high income families
  • High income families’ perceived property value is more than 2.5 times higher than that of low income families
  • More than two in five (43%) families fear rising prices as inflation continues to climb and debts grow

The savings gap between low and high income families has grown 25% year on year, from £50,072 in winter 2015/16 to £62,790 in winter 2016/17. Aviva’s data shows low income families (earning £1,500 or less a month1) now typically have just £95 in savings and investments excluding pensions, compared to £136 a year ago, while high income families (earning £5,001 a month or more) have increased typical savings to £62,885. Aviva’s data suggests one in four (25%) UK families are classed as low income, while less than one in ten (8%) fall under the high income classification. 

The typical amount held in savings and investments across all UK families has fallen from its highest level of £4,426 last summer to £3,134, the lowest level since summer 2015 (£3,116). This is likely to have been influenced by the fact typical monthly family incomes have fallen to a two-year low of £2,006, according to Aviva’s research.

Table 1: The savings gap between low and high income families


Winter 2015/16

Winter 2016/17

Difference (%)

Low income families




High income families








Homeownership falls to lowest point in four years, with low income families worst off

Aviva’s data suggests the proportion of UK families who own their own home (64%) – either outright or with a mortgage – is now at the lowest point in four years. This compares to 67% a year ago and 70% in winter 2014/15. Overall, more than one in ten (12%) UK families with children are living in private rental accommodation, while 10% live in social housing. 

Low income families are least likely to be homeowners (41%), down from 43% a year ago. In contrast, 90% of high income families are homeowners, up from 88% in winter 2015/16. The difference in homeownership levels between high and low income families has risen four percentage points in the past year, from 45 percentage points to 49 percentage points.

The fall in homeownership has been driven by an annual decline in mortgaged homeownership, from 49% of all families to 46%. This could be a sign of difficulties getting a mortgage for first-time buyers or families not considered ‘prime’ borrowers. With typical incomes falling, others may be falling foul of affordability rules or struggling to raise a deposit.

Overall, UK families believe the value of their home has risen by a modest 4% in the past year (from £184,300 to £191,960), similar to the house price growth observed by the Nationwide House Price Index2. In contrast, high income families believe the value of their home has fallen 2% since winter 2015/16 – from £363,750 to £355,150 – in a possible sign of house prices softening at the upper end of the market. However, high income families’ perceived property value is still more than two and a half times higher than that of low income families (£135,330).

Table 2: Homeownership falls as low income families suffer most 


Winter 2015/16

Winter 2016/17

Difference (percentage points)

Homeownership levels




All UK families




Low income families




High income families




Value of property



Difference (%)

All UK families




Low income families




High income families




Rising prices among families’ greatest fears for financial future

More than two in five (43%) families now say significant increases in the price of basic necessities is one of the biggest threats to their standard of living in the next three months, up from 36% last summer. This fear looks justified given that consumer price inflation (CPI) rose to a high of 1.8% in January3 – a level not seen since June 2014.

Having dipped in 2014, household debt – excluding mortgages and student debt – has steadily been growing as low interest rates give families greater access to low-cost credit. Average debt, tracked by Aviva since 2011, has now surpassed its previous record of £14,950 (summer 2013) to reach £17,630 in winter 2016/17: an increase of 18%.

Personal loans are the single biggest contributor to household debt, with families owing an average of £2,770: an increase of 33% since last winter (£2,080). This borrowing has overtaken credit card debt, which nonetheless remains the second biggest contributor to family debt. Families owe the largest average amount on credit cards (£2,680, up from £2,370 a year ago) since Aviva began tracking this data.

Families are spending £216 a month on debt repayments, the equivalent of almost a tenth (9%) of their monthly outgoings4. Despite this, their average debt balance has grown to 82 times their average monthly repayment, compared with 61 times in winter 2015/16. Last year families were spending £215 a month on debt repayments to pay off a total debt of £13,070.

It means that, even before interest is taken into account, the average family would need almost seven years (82 months) to match their current debt by making the average monthly repayment, up from just over five years (61 months) in winter 2015/16.

Paul Brencher, Managing Director, Individual Protection, Aviva UK said:

“The gulf between low and high income families is showing signs of widening, in a worrying indication that those less fortunate are finding their finances increasingly stretched. While high income families have been able to increase their savings pots, those with low incomes have seen theirs fall to less than £100. This reflects the trend of shrinking savings seen across UK families as a whole. Without a financial back-up, any sudden unexpected expense could put low income families in particular under added pressure.

“Similarly, while homeownership has increased among high income families, fewer low income families are now on the property ladder. Although mortgage rates are at record lows, qualifying for these deals and getting a deposit can be difficult for those with limited household income or unusual circumstances. Britain’s broken housing market means becoming a homeowner is a distant dream for many families and government plans must swiftly be turned into action to stem the tide of inequality.  

“With inflation climbing fast, families are understandably concerned about the impact of rising prices on the household purse. Poor returns on savings and rising inflation means families could well see their safety net eroded if they don’t keep up regular contributions and try to boost savings pots whenever possible.”

- Ends –

1 Refers to net figures

2 Nationwide House Price Index, January 2017

3 ONS UK consumer price inflation: January 2017

4 Total monthly expenditure was £2,507 in winter 2016/17


Instinctif Partners: Jordan Campbell, Rachel Morrod or Angeli Everitt: 0207 427 1400 / 07815 540 932 / 07815 541 791 or

Aviva Press Office: Melissa Loughran on 01904 452791 or  

Aviva’s spokesperson, Alistair McQueen, is available for comment/broadcast interview


Over 2,300 people aged 18-55 who live as part of one of six family groups were interviewed to produce the report’s latest tracker findings for Q4 2016.

In total, 32,767 UK consumers have been interviewed for the tracker between December 2010 and December 2016.  This data was combined with additional information from external sources cited within the main report listed below and used to form the basis of the Aviva Family Finances Report. All statistics refer to figures from the latest wave of research unless stated otherwise.

Notes to editors:

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