Mortgage affordability has reached its tightest level since the Global Financial Crisis of 2008, according to a new analysis by trade body UK Finance. The research reveals that homebuyers are currently spending an average of just over a fifth (21.3%) of their gross household income on initial mortgage repayments, the highest level since 2008.
Regional Variations in Affordability
The study highlights significant regional disparities. At a local authority level, borrowers in North Norfolk (25.7%) and the London Borough of Hillingdon (25.1%) spend over a quarter of their gross income on mortgage repayments. Eight of the ten least affordable areas are in the London commuter belt, including Luton (24.9%), Slough (24.8%), and Spelthorne (24.8%).
Conversely, seven of the ten most affordable local authorities are in Scotland, such as East Ayrshire and Inverclyde, where borrowers need nearly nine percentage points less of their income for mortgage payments compared to North Norfolk. The City of London, despite being a business district with limited housing, ranks among the most affordable due to its high-earning buyer profile.
Expert Commentary
James Tatch, Head of Analytics at UK Finance, said: "It’s been challenging times for those trying to buy a property in recent years, with affordability pressures weighing heavy. But the pain is not felt equally across the country. Property prices, wages, and demographics vary greatly across and within regions. All of these have an impact on affordability and, if you’re a landlord, how profitable your investment property is."
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, commented to Newspage: "Mortgage affordability is riding the same rollercoaster as general household affordability. Sadly it's a rollercoaster that just keeps getting steeper, as the cost of everything is climbing far quicker than incomes. There is only so much that can be cut back on, which most households would have done by now. These figures show a large contrast between the areas worst affected but also highlights the benefit of getting professional advice on what, for most, is their largest monthly outgoing."
