London mortgages least affordable in decade but national affordability remains steady

30 March 2019

  • London homeowners spend almost half of their disposable income (46.8%) on their mortgage
  • Top 10 least affordable mortgages in the UK found in London and the South East
  • Copeland in the North West is the most affordable local authority

London mortgages have become increasingly less affordable over the past decade, but remain below the 2007 peak when mortgage payments were more than half (52.4%) of earnings.

 New research from Halifax has revealed that mortgage affordability across the UK has remained at or just below the 30% of average disposable earnings since 2009.

Over the past decade, London average mortgage payments, as a proportion of disposable earnings have risen by 18% (from 40% in 2008 to 47% today), driven by house price increases.

Meanwhile, the cost of maintaining a mortgage in Northern Ireland now only takes up half of the average earnings (19% vs 39% in 2008) for the region than 10 years ago (51% of 2008 levels), with Scotland (18% vs 30% in 2008) not far behind.

Typical mortgage payments accounted for over a quarter (28.8%) of homeowners’ disposable income in 2018. This means mortgage affordability levels for home movers have improved significantly by 39% since 2008(35%).

Andy Bickers, Mortgage Director at Halifax, said:Despite rising house prices and interest rates, the average UK earnings have also risen in line, meaning that national affordability has remained broadly flat. This is good news for first-time buyers, homeowners and a boost to the housing market.”

East Anglia and London had the largest reductions in affordability while Scotland and the South East saw the biggest improvements in affordability, with mortgage payments dropping 9% as a proportion of average disposable earnings.

While mortgage payments remain low as a proportion of disposable earnings in Northern Ireland (19.3%), Scotland (18.2%) and the North (20.8%), Yorkshire & the Humber (22.6%) and the North West (at 22%), these are highest in Greater London (46.8%), the South East (38.8%) and South West (34.1%).

The 10 most affordable local areas are all in northern England and Scotland, whilst the 10 least affordable areas are all in London and the South East.

Scotland and the North West have a share of the 10 most affordable local authority districts in the UK. Copeland in Cumbria is the most affordable, where typical mortgage payments account for 13% of average local earnings, followed by West Dunbartonshire in Scotland, Barrow-in-Furness Burnley and Hyndburn in the North West. (Table 2)

The 10 least affordable areas are predominantly in London and the South East. Brent and Haringey are the least affordable places in the UK with average mortgage payments on a new mortgage loan, accounting for 61% of average local disposable earnings, followed by Hackney (61%) and South Bucks (60%). (Table 3)

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