Market Volatility and Financial Pressures Persist: Aryza’s Insights on Q2 2025 Insolvency and Lending Trends
Aryza is pleased to share its analysis of recent trends in the individual and company insolvency market in England, Wales, and Northern Ireland from April to June 2025, based on the latest data released by the Insolvency Service.
Personal Insolvency
The total number of individual insolvencies in the second quarter of 2025 reached 30,305, up from 29,312 during the same period in 2024.This 3.4% rise reflects the continued financial pressures facing households, including elevated living costs, interest rate burdens, and the lingering effects of economic uncertainty.
The total number of individual insolvencies in April was 10,012, 4% higher than the same time last year. This consisted of 5,586 individual voluntary arrangements (IVAs), 3,837 debt relief orders (DROs), and 589 bankruptcies, with bankruptcies remaining approximately half of the levels prior to 2020 and 11% lower than in April 2024.
For May, 10,014 individuals entered insolvency, 5% higher than the previous year, with 648 bankruptcies, 3,783 DROs and 5,583 IVAs recorded. In June, 10,279 people entered insolvency, made up of 596 bankruptcies, 5,548 IVAs, and 4,135 DROs.
Richard Haymes, Associate Director of Policy and External Relations at Aryza, commented:
“New IVA volumes in the first half of 2025 appear to have stabilised following the FCA’s 2023 ban on debt packagers and the shift to alternative acquisition models. A recent increase has partly been driven by changes to the IVA Protocol, which takes effect from July 2025 and aims to improve clarity and consistency for both consumers and creditors.
“DROs reached record volumes not seen since June 2024, with growth continuing throughout the quarter. GOV.UK data shows Citizens Advice and Benesse Advice, the two leading MaPS-funded providers, remain the primary sources of DRO volume. Bankruptcy volumes remain significantly below pre-pandemic levels mainly because creditors are less inclined to use bankruptcy as a debt recovery strategy.
“This activity occurs during a period of increased scrutiny of the personal insolvency framework. The Insolvency Service’s ongoing Personal Insolvency Review (PIR) could result in significant reforms in how consumers access and navigate solutions. The PIR aims to establish a simpler, fairer, and more efficient system for individuals, creditors, and the broader economy. Meanwhile, the Money Advice Trust and Citizens Advice have proposed a single, flexible insolvency model focused on debt rehabilitation and financial resilience.”
Corporate Insolvency
In the second quarter of 2025, corporate insolvencies totalled 6,334, compared to 6,544 in 2024.
For April, there were 2,053 insolvencies, which is 5% lower than the numbers in the same period in 2024. This was made up of 1,544 creditors’ voluntary liquidations (CVLs), 150 administrations, 24 company voluntary arrangements (CVAs), and 379 compulsory liquidations.
May saw 2,238 insolvencies which is 15% higher than the numbers we saw in May 2024. This consisted of 1,734 CVLs, 136 administrations, 14 CVAs and 354 compulsory liquidations, which was 7% lower than the ten-year high seen in the previous month.
When looking at the statistics for June, 2,043 companies entered insolvency, 16% lower than the previous time last year. This comprised of 1,585 CVLs, 111 administrations, 15 CVAs and 332 compulsory liquidations.
Richard Haymes, Associate Director of Policy and External Relations at Aryza, commented:
“Between April and June 2025, corporate insolvencies were slightly lower than the same period in 2024. While overall volumes have eased, the monthly breakdown highlights volatility in business stability, with insolvencies peaking in May and compulsory liquidations reaching a seasonally adjusted high in April, the highest since September 2014.
“These fluctuations reflect the ongoing challenges facing businesses, including cost pressures, shifting consumer demand, and the lagging impact of policy changes introduced earlier in the year, including national insurance and minimum wage increases. Although some sectors may be adapting, the statistics highlight that insolvency volumes could remain elevated in the coming quarters, particularly if economic conditions remain tight.”
Lending Market Insights
From April to June 2025, lending activity showed notable variation, highlighting how borrower behaviour and lender activity are responding to evolving economic signals. Net lending to households and private sector companies was £1.2 billion in April, a significant decrease from March of this year, but increased to £8.4 billion in May and £18.9 billion in June.
April saw a moderate decrease in lending activity with net lending totaling £1.4 billion. Net mortgage lending also saw a significant decrease to £0.8 billion compared to the previous month, but consumer credit borrowing increased to £1.9 billion.
May marked an increase in lending activity to £8.4 billion net flow, which was driven by the increase of net lending to households, PNFCs and NIOFCs respectively. Net mortgage lending also increased to £2.1 billion following the significant decrease in April, however consumer credit borrowing decreased to £0.9 billion.
June had a £18.9 billion net flow, which was the highest net lending since September 2022. Net mortgage lending and consumer credit borrowing both increased, reaching £5.3 billion and £1.4 billion respectively.
The data suggests that the market remains vulnerable to broader economic signals. The sharp decline in net lending in April indicates a temporary period of caution, likely due to seasonal factors or uncertainty. However, the strong recovery in May and the further increase in June point to renewed confidence among borrowers and higher demand for credit.
Increasing mortgage lending and a rebound in consumer credit by June show growing confidence in both the housing and retail credit markets; nonetheless, the decrease in consumer borrowing in May reflects ongoing cost-of-living pressures. Overall, the quarter reveals a shifting lending landscape driven by inflation trends, interest rate expectations, and changing borrower behaviour.
Aryza is committed to providing ongoing quarterly analysis and commentary on the personal and corporate insolvency market, helping stakeholders navigate this evolving landscape effectively, and ensuring they are well informed about the latest trends and developments.