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Mortgages command greater share of spending

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    Average mortgage repayments now cost a third of earnings, new research(1) has found. 

    Percentages game

    The research took the average house price of £276,019, with a 75% loan-to-value mortgage of £207,014. Applying an average interest rate for a three-year fixed rate mortgage of 1.84% over a 25-year term,  the average monthly mortgage repayment comes out at £859.41.

    The average annual gross salary in the UK is £31,447 or £2,261 a month. As such, today’s average mortgage repayment equates to 32.8% of monthly income.

    Back to 2008?

    Experts suggest mortgages might soon be as unaffordable as in the aftermath of global financial crisis. Earnings spent on mortgage repayments are currently 5% higher than in 2019 and 3.1% higher than in 2011. The current percentage is not far off the 34.3% recorded in 2008.

    Further rises

    The Bank of England again increased Bank Rate at its latest meeting in June, taking it up to 1.25%. With further rises expected, mortgage borrowing could become increasly exoensive over the next year.

    Here to help

    In a fast-changing environment, it’s more important than ever to have someone on your side. We can help you secure the best mortgage for your needs. 

    As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

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    Andrew Simmonds

    Andrew Simmonds is the managing director at Simmonds Mortgage Services. He's been providing mortgage advice to home owners for many years.

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