Two-thirds of those aged between 18 and 34 say they have taken on new debt due to the cost-of-living crisis, The Mortgage Lender (TML) finds. 

TML’s survey of 2,000 people found that 10% of 18 to 34-year-olds have taken out a personal loan since the beginning of 2022.

It also revealed that 11% have taken out a pay-day loan, risking the high interest that comes with these products.

TML says this could impact their future ability to access a loan or mortgage. 

Respondents show a greater reliance on buy now, pay later schemes, with 18% of 18 to 24 years old’s using them in response to rising costs. 

An additional 25% have made greater use of their credit card.  

Respondents also show how 16% of this age group have turned to using their overdraft more than they had done in previous years. 

TML explain that if this becomes the case for a prolonged period and payments are missed this may lead to long-term ramifications on individual credit scores. 

TML chief executive Peter Beaumont says: “Taking on any debt is risky, but to see younger generations take on the insecurity of a pay-day loan is troublesome. As cost-of-living concerns grow with rising energy costs, there’s a concern that later life plans can be severely impacted by the decisions individuals are being forced to make due to the current economic circumstances.”

“While taking on debt may help some to deal with their immediate expense, it’s vital that they take it on with their eyes wide open and with a repayment plan in place. This will prevent the situation from snowballing out of control and help get back in the clear as soon as possible.”