Monthly mortgage repayments have become the toughest burden since the 2008 financial crisis for the average earner, Moneyfacts reveals.
Moneyfacts says that an average earner’s monthly mortgage payment is now close to half of their gross salary.
The average house price was £78,000 in 2000, which was around five times the average wage of £15,800.
This compares to 2025 where the average house price is £269,000, around seven times the average wage of £37,600, well above standard lending caps.
In that same period between 2000 and 2025, wages have risen 237% while house prices have increased 345%.
Moneyfacts suggests that if wages had increased at the same rate as house prices since 2000, the average UK salary would be over £54,000 in 2025.
It highlights that house price inflation has far outpaced the rise in most household goods during this time.
It found that an average homebuyer could save about £100 per month by securing one of today’s lowest two-year fixed mortgage rates on the market, at 90% loan-to-value (LTV), which is around 4.20% compared to June’s average rate of 5.12%.
However, it notes this would still account for roughly 38% of their gross monthly income, a similar level to what homeowners were paying back in June 2018 at average rates.
Moneyfacts head of news Adam French says: “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.”
Meanwhile, Propertymark NAEA president Mary-Lou Press adds: “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.”
