Housing affordability in the UK has worsened notably since 2020, with the share of income spent on mortgage payments rising for first-time and repeat buyers. In 2024, homebuyers spent, on average, 20.5 percent of their income on mortgage payments, up from 16.2 percent in 2020. First-time buyers spent a notably higher percentage than repeat buyers. One of the main factors for the declining affordability is the rising housing costs. House prices have increased rapidly since the COVID-19 pandemic. Mortgage rates have also soared since, leading to notably higher monthly payments.

Mortgage rates surged at an unprecedented pace in 2022, with the average 10-year fixed rate doubling between March and December of that year. In response to mounting inflation, the Bank of England implemented a series of rate hikes, pushing borrowing costs steadily higher. By October 2025, the average 10-year fixed mortgage rate stood at **** percent. As financing becomes more expensive, housing demand has cooled, weighing on market sentiment and slowing house price growth. How have the mortgage hikes affected the market? After surging in 2021, the number of residential properties sold fell significantly in 2023, dipping to just above *** million transactions. This contraction in activity also dampened mortgage lending. Between the first quarter of 2023 and the first quarter of 2024, the value of new mortgage loans declined year-on-year for five consecutive quarters. Even as rates eased modestly in 2024 and housing activity picked up slightly, volumes remained well below the highs recorded in 2021. How are higher mortgages impacting homebuyers? For homeowners, the impact is being felt most acutely as fixed-rate deals expire. Mortgage terms in the UK typically range from two to ten years, and many borrowers who locked in historically low rates are now facing significantly higher repayments when refinancing. By the end of 2026, an estimated five million homeowners will see their mortgage deals expire. Roughly two million of these loans are projected to experience a monthly payment increase of up to *** British pounds by 2026, putting additional pressure on household budgets and constraining affordability across the market.

Mortgage repayments as a percentage of monthly equivalised disposable household income, throughout the house price and income distribution.

The average value of mortgage loans granted in the UK since 2016 ranged between ******* British pounds and ******* British pounds. In the third quarter of 2024, the average mortgage loan amounted to nearly ******* British pounds - the second-highest figure on record after the third quarter of 2022. The overall increase in the average value of mortgages granted can be explained by the accelerated increase in house prices since the outbreak of the coronavirus (COVID-19) pandemic.

Mortgage interest rates in the UK were on a downward trend for more than a decade before soaring in 2022. In the first quarter of 2025, the average weighted interest rate stood at **** percent — nearly ***** times the interest rate in the first quarter of 2022. Mortgage rates also vary depending on the type of mortgage: Historically, fixed rate mortgages with a shorter term had on average lower interest rates. What types of mortgages are there? In terms of the type of interest rate, mortgages can be fixed and variable. A fixed interest rate is simply a mortgage where the rate of repayment is fixed, while a variable rate depends on the lender’s underlying variable interest rate. Furthermore, mortgages could be for a house purchase or for refinancing. The vast majority of mortgages in the UK are fixed rate mortgages for house purchase, and only a small share is for remortgaging. How big is the UK mortgage market? The UK has the largest mortgage market in Europe, amounting to over ** billion euros in gross residential mortgage lending as of the fourth quarter of 2024. When comparing the total outstanding residential mortgage lending, the UK also ranks first with about *** trillion euros.

Mortgage Rate in the United Kingdom remained unchanged at 6.78 percent in October. This dataset provides - United Kingdom BBA Mortgage Rate- actual values, historical data, forecast, chart, statistics, economic calendar and news.

Interest rates in the UK spiked in 2022 and 2023, with the average rate for new mortgage advances to individuals and individual trusts rising by **** percentage points between January 2022 and January 2024. Mortgages on a floating interest rate were the most expensive as of January 2024, at **** percent. On the other hand, the average rate for new advances with a five-year fixed rate was **** percent.

Since 2004, the median value of a mortgage advance for a home purchase in the UK has more than doubled. In 2024, the average mortgage advance stood at ******* British pounds. The increase has been a direct result of the overall rise of house prices in the UK.

Mortgage Approvals in the United Kingdom decreased to 65.02 Thousand in October from 65.65 Thousand in September of 2025. This dataset provides the latest reported value for - United Kingdom Mortgage Approvals - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

Median price paid for residential property in England and Wales by property type and electoral ward. Annual data.

Median price paid for residential property in England and Wales, by property type and administrative geographies. Annual data.

Median price paid for residential property in England and Wales, for all property types by lower layer super output area. Annual data..

Affordability ratios calculated by dividing house prices by gross annual residence-based earnings. Based on the median and lower quartiles of both house prices and earnings in England and Wales.

Interest Rate on Outstanding Mortgages in the United Kingdom remained unchanged at 3.89 percent in September. This dataset includes a chart with historical data for the United Kingdom Interest Rate on Outstanding Mortgages.

For the past decade, buying a home in the UK has been more affordable than renting one, when only considering the monthly costs. The renting versus buying gap fluctuated during the period and in 2016, it reached its highest value of 131 British pounds. In 2023, the monthly costs for a first-time buyer were 1,231 British pounds, compared to 1,258 British pounds for renters. Rental growth vs house price growth Housing costs in the UK have been on an uprise, with both renting and buying a home increasingly unreachable. Though the monthly costs of buying have consistently been lower in the past decade, house price growth has been much stronger than rental growth since the beginning of the pandemic. Additionally, buyers have been affected by the aggressive mortgage rate hikes, making acquiring their first home even less affordable. Barriers to homeownership Buying a home is not straightforward. For younger (18-40) potential first-time buyers, there are a number of barriers. Approximately one in three first-time buyers point out that raising a deposit was the main obstacle. Other reasons stopping buyers were not being able to take out a mortgage on their current income and poor credit ratings. Unsurprisingly, the highest share of people who buy a home with a mortgage was in the age group of 45 to 55-year-olds.

Annual house price data based on a sub-sample of the Regulated Mortgage Survey.

Interest rate on new mortgages in the United Kingdom decreased to 4.19 percent in September from 4.26 percent in August of 2025. This dataset includes a chart with historical data for the United Kingdom Interest Rate on New Mortgages.

Context

Demand for houses has exploded in the UK in the last two years due to the pandemic. As a result, it feels like it is becoming more difficult for young people to afford to buy a house in the near future. I wanted to collect data to see if this sentiment is backed up by numbers.

Content

In this folder you will find the average house price in the UK between between 1975 and 2020, the median wage in the UK between 1999 and 2020. Both of these metrics have been adjusted by inflation up to 2020.

This folder also contains a table containing data on the wage gap in 2021, in the UK and by age group.

Sources

Statista: https://www.statista.com/statistics/802183/annual-pay-employees-in-the-uk/ and https://www.statista.com/statistics/1002964/average-full-time-annual-earnings-in-the-uk/.

allAgents: https://www.allagents.co.uk/house-prices-adjusted/.

Bank of England: https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator.