Mortgages amount to more than income

July 29, 2017 by Brendan O'Neill

Property Market

The latest research reveals that the average mortgage debt amounts to more than household income.

The Financial Stability Report, produced by the Bank of England, states that the ratio of income to the average household debt, is 135%. The report shows that mortgage debt accounts for 101% of total debt. Since 2006, the figures have fallen slightly, from 104% of debt at that time being due to a mortgage.

The number of transactions has fallen since 2006, from 140,000 to less than 100,000. Mortgage approvals have fallen to 64,645 from 119,045. Over the last 10 years, the number of advances to home movers has also fallen, from 59,342 down to 25,700.

During April this year, consumer credit also increased by 10.3%, which prompted fears of the increased levels of unsecured loans. According to Bank of England data, there were also fewer first time buyers than in 2006, with the figure falling to 25,400 from 33,567. According to data from L & C Mortgages, the average debt for people aged between 18 and 34 is £12,992, which may make it much harder for a first time buyer to afford mortgage repayments.

The research by L & C Mortgages revealed that 2.2 million households believe their mortgage repayments are too high, while 4.2% don’t think that they will be able to pay off their mortgage. In order to be able to afford mortgage repayments, 2.54 million have had to reduce other spending.

Mortgage advisors study on CeMAP courses so that they can help borrowers find an affordable mortgage, where possible.