With house price growth slowing and renewed debate around property tax reform, new analysis from INTEREST by Moneyfacts sheds light on the growing financial pressure mortgage payments are placing on UK households.
According to the research, an average earner who secured a mortgage in recent years—despite meeting deposit requirements—would now be spending nearly half of their gross income on monthly repayments. This marks the heaviest mortgage burden since the 2008 financial crisis.
At the start of the millennium, the average UK house cost around £78,000, roughly five times the average salary of £15,800. Fast forward to 2025, and the average house price has soared to £269,000—now seven times the average income of £37,600—well above traditional lending caps.
Since 2000, average wages have increased by 237%, while house prices have surged by 345%. Had earnings kept pace with property prices, the average salary in 2025 would exceed £54,000.
To illustrate the disparity further, if everyday essentials had risen at the same rate as house prices, a loaf of bread would now cost £2.28, and a dozen eggs £4.73.
While current market conditions offer some relief – such as a potential saving of £100 per month for borrowers who secure one of the lowest two-year fixed rates at 90% loan-to-value (around 4.20%) – the average mortgage payment would still consume approximately 38% of gross monthly income. That’s on par with repayment levels last seen in mid-2018.
This data underscores a broader affordability challenge and reignites concerns over the long-term sustainability of the UK housing market.
Adam French, head of news at Moneyfacts, said: “Affordability may have eased a touch over the past 12 months, but buying a home in 2025 is still too much of a financial stretch for many. Putting aside the not inconsiderable tasks of affording rapidly rising rent costs and saving a sizeable deposit, monthly mortgage repayments are eating up almost half of gross earnings – the toughest burden since the 2008 financial crisis.
“Years of ultra-low borrowing costs, government incentives and a lack of housing supply have driven house prices far ahead of wages, leaving many buyers caught between high prices, expensive borrowing and strict lending rules. It all means that a typical borrower today will need to take a mortgage over a 50-year term to keep their repayments to a more affordable 35% of gross monthly income.
“There remains an acute risk that the market could overcorrect or overheat depending on the future path of interest rates, inflation and wage growth despite a recent softening of house price growth. We now need a period of stability where modest house price growth allows incomes to catch up so the market can return to more sustainable levels that benefit homeowners, homebuyers and the wider economy. In the meantime, it may mean holding rates where they are until inflation is in check is what is needed to nip another boom-and-bust cycle in the bud.”
| Month/Year | Average monthly earnings (gross) | Average house price | Moneyfacts Average Mortgage Rate | Average Monthly mortgage payment* | % share of gross monthly salary |
| Jun 2000 | £1,345.50 | £82,197.00 | 6.57% | £499.00 | 37.09% |
| Jun 2001 | £1,423.21 | £88,892.00 | 5.71% | £503.00 | 35.34% |
| Jun 2002 | £1,475.30 | £104,372.00 | 5.33% | £563.00 | 38.16% |
| Jun 2003 | £1,513.27 | £118,444.00 | 4.54% | £593.00 | 39.19% |
| Jun 2004 | £1,576.33 | £134,845.00 | 5.29% | £727.00 | 46.12% |
| Jun 2005 | £1,645.42 | £144,410.00 | 5.17% | £779.00 | 47.34% |
| Jun 2006 | £1,736.38 | £154,927.00 | 5.18% | £836.00 | 48.15% |
| Jun 2007 | £1,811.63 | £171,659.00 | 5.88% | £995.00 | 54.92% |
| Jun 2008 | £1,874.73 | £167,498.00 | 6.31% | £994.00 | 53.02% |
| Jun 2009 | £1,896.62 | £146,984.00 | 3.73% | £756.00 | 39.86% |
| Jun 2010 | £1,914.55 | £158,155.00 | 4.74% | £812.00 | 42.41% |
| Jun 2011 | £1,974.68 | £154,530.00 | 4.49% | £773.00 | 39.15% |
| Jun 2012 | £1,999.80 | £156,645.00 | 4.62% | £784.00 | 39.20% |
| Jun 2013 | £2,020.88 | £159,045.00 | 3.75% | £736.00 | 36.42% |
| Jun 2014 | £2,035.52 | £172,331.00 | 3.62% | £776.00 | 38.12% |
| Jun 2015 | £2,083.19 | £181,289.00 | 3.02% | £774.00 | 37.15% |
| Jun 2016 | £2,136.65 | £196,106.00 | 2.81% | £814.00 | 38.10% |
| Jun 2017 | £2,201.57 | £204,347.00 | 2.53% | £825.00 | 37.47% |
| Jun 2018 | £2,248.68 | £210,355.00 | 2.66% | £873.00 | 38.82% |
| Jun 2019 | £2,338.11 | £211,915.00 | 2.65% | £880.00 | 37.64% |
| Jun 2020 | £2,303.31 | £216,208.00 | 2.17% | £849.00 | 36.86% |
| Jun 2021 | £2,502.35 | £242,777.00 | 2.72% | £1,008.00 | 40.28% |
| Jun 2022 | £2,658.87 | £258,118.00 | 3.30% | £1,132.00 | 42.57% |
| Jun 2023 | £2,901.88 | £258,275.00 | 5.34% | £1,393.00 | 48.00% |
| Jun 2024 | £2,993.35 | £259,605.00 | 5.76% | £1,470.00 | 49.11% |
| Jun 2025 | £3,138.69 | £269,079.00 | 5.12% | £1,416.00 | 45.11% |
Sources: Moneyfacts Analyser, ONS & Land Registry
*Capital repayment mortgage over 25 years with a 10% deposit using the Bank of England borrowing calculator
Reflecting on the Moneyfact report, Mary-Lou Press, president of NAEA Propertymark (National Association of Estate Agents), commented: “While a reduction in interest rates will have helped many with mortgage costs and made the prospect of borrowing money to step onto or move up the housing ladder easier, it is clear that wage growth is not keeping pace with house price growth.
“Homeowners are witnessing a squeeze on their finances, and for many aspiring first-time buyers, they now need to save up what can be an unrealistic large lump sum to purchase their first home.
“With speculation circulating regarding potential changes to Stamp Duty in England and Northern Ireland, we need the UK government to focus on reviewing current rates and bands rather than targeting higher-value properties, as historically, reducing or removing property taxes has led to increased transactions, which in turn stimulates spending and drives broader economic growth. Alongside this, all governments throughout the UK need to meet their individual housing targets to increase the supply of homes and bring down property prices in the longer term.”
Read the orginal article: https://propertyindustryeye.com/homeowners-face-mounting-mortgage-pressure-amid-market-and-policy-shifts/
