Mortgage holders are on track to see their incomes fall by an average of 1% over the next five years, “as high interest rates bear down on households coming off fixed-rate deals”, says a Resolution Foundation report.  

The thinktank describes the outlook for living standards across Britain as “bleak”, with typical incomes on track to grow by just 1%, or £300, over the second half of the decade, in its The Living Standards Outlook 2025 study, funded by Nationwide. 

Around 1.6 million households in the UK are expected to remortgage their properties in 2025, according to UK Finance. 

The thinktank’s report considers a range of scenarios for British living standards across the income spectrum over the next five years. 

In its central projection – based on forecasts from the Office for Budget Responsibility and the Bank of England – typical disposable incomes after housing costs grow by just 1% between 2024-25 and 2029-30. 

However, the report says, “housing tenure plays a key role in determining the outlook”. 

It adds: “Outright owners will be the tenure type to see the fastest boost to living standards, as their incomes grow by 3%.” 

Labour plans to build 1.5 million homes over the next five years, which it says will boost economic growth. 

The study says: “This projection for weak income growth over the second half of the decade follows a rollercoaster first half, in which living standards were rocked by Covid-19 and the cost-of-living crisis.  

“Britain then experienced a mini living standards boom, as incomes grew by an impressive 4%, or £1,300, in 2024-25. 

It adds: “This living standards bust, boom and bleak outlook could leave the 2020s as the first decade of the modern era to witness no improvement in disposable incomes across Britain.”  

The thinktank points out that median incomes grew by 18% during the noughties, and by 9% during the 2010s, it projects zero growth between 2019-20 and 2029-30. 

But it adds: “The end of the 2020s is still a long way off, and the economic outlook can improve, with policy offering a helping hand. 

“Should the current period of strong wage growth continue and employment return to its previous peak, repeating the upside living standards surprise of the 2010s, typical income growth over the rest of the decade would triple to 3%.” 

Resolution Foundation principal economist Adam Corlett adds: “Maintaining strong wage growth and returning to pre-pandemic employment levels would make middle-income Britain far better off, while ending the two-child limit can lift living standards for poorer families.”