UK homebuyers are experiencing the most challenging mortgage affordability conditions since 2008, with initial repayments consuming 21.3% of gross income on average, according to data from UK Finance.
The figures, which relate to 2025, do not reflect the recent economic volatility following the Iran conflict, which has driven up mortgage rates and could add hundreds or thousands of pounds to borrowers’ annual costs.
Regional disparities emerge
The data reveals substantial regional variation in affordability pressures. North Norfolk and Hillingdon in west London recorded the highest burden, with homebuyers spending 25.7% and 25.1% of gross income on mortgage repayments respectively.
Eight of the ten least affordable areas were located in the London commuter belt, including Luton (24.9%), Slough (24.8%), Broxbourne (24.4%) and Harlow (24.2%).
Scotland dominated the most affordable locations, with seven of the top ten areas. East Ayrshire and Inverclyde both recorded 17% of gross income spent on initial mortgage repayments. The City of London also appeared in the top three most affordable areas, though UK Finance attributed this to the typically high earnings of City buyers rather than lower property prices.
Market activity remains robust
Despite affordability pressures, mortgage lending for house purchases reached 723,000 in 2025, representing a 17% increase on 2024. The rise comes as the sector faces broader challenges, with international buyers increasingly active in the UK market and lenders adapting to changing conditions.
James Tatch, head of analytics at UK Finance, said the past few years had been challenging for property buyers, with affordability pressures weighing heavily. “But the pain is not felt equally across the country,” he added. “Property prices, wages and demographics vary greatly across and within regions. All of these have an impact on affordability.”
The outbreak of war on 28 February triggered widespread repricing of fixed-rate mortgage deals, with numerous products withdrawn from the market. However, recent weeks have seen a gradual decline in fixed-rate mortgage pricing.
The affordability squeeze reflects the combined impact of elevated property prices, increased borrowing costs and the challenge of accumulating deposits. With new rental legislation taking effect, the housing market faces continued structural pressures across both ownership and rental sectors.
