UK mortgage average increases to £85,000

December 31, 2015 by Brendan O'Neill

Property Market

The average mortgage debt of a UK home owner is now £85,000, according to a study conducted by the Bank of England.

The study suggests that low inflation and rising wages mean that Britons are better able to deal with an interest rate increase. In 2014, the average mortgage debt was £83,000, but as more first time buyers are looking for homes and the fact that property prices have risen, the average debt has increased again this year.

The research also found that those with a mortgage struggled with the increased mortgage debt, due to the austerity measures introduced by the government, which have reduced around a third of household incomes.

Threadneedle Street stated that the average wage had risen by 2% in 2015, while low inflation had further offset austerity measures. The conclusion was that mortgage payers would be able to cope with an increase in the Bank of England base rate to 2%.

The average unsecured debt has remained level, at £8,000 per household. It is expected that the study will reassure policy makers that households will be able to meet all their financial obligations, even if the interest rates increase next year. However, concerns still remain for low income families who will struggle to meet repayments if the base rate rises to 2%.

A mortgage adviser who has spent time studying CeMAP courses will be able to provide advice and look at the possibility of interest rate increases and the potential effect on monthly repayments, before taking on a large mortgage.