UK Finance has indicated that mortgage affordability across the United Kingdom has reached its most strained point since 2008, according to a new analysis by UK Finance. The industry body’s latest Lending Where We Live report highlights sharp contrasts in the financial burden faced by homebuyers and landlords depending on where they live, with property prices, earnings and local market conditions driving major differences.
UK Finance pointed out that last year saw 723,000 new home-purchase loans completed, a 17 per cent rise on the previous year.
Yet the typical first-time buyer or mover now devotes 21.3 per cent of gross household income to mortgage repayments – the highest share recorded in 17 years.
This average masks even greater pressure in certain hotspots. In North Norfolk and the London borough of Hillingdon, borrowers allocate more than a quarter of their income (25.7 per cent and 25.1 per cent respectively) to initial repayments.
Eight of the ten least affordable local authorities sit in the capital’s commuter belt, including Luton, Slough and Spelthorne, where repayment ratios hover around 24-25 per cent.
By contrast, seven of the ten most affordable areas are in Scotland.
Borrowers in places such as East Ayrshire and Inverclyde spend roughly nine percentage points less of their income on mortgages than those in the least affordable English districts.
The City of London, despite high prices, appears relatively affordable on this measure because of its concentration of high-earning residents. The buy-to-let sector faces its own regional story.
Higher stamp duty, the phased removal of mortgage-interest tax relief and tougher lending rules have squeezed profitability and encouraged some landlords to sell up.
Nevertheless, purchase activity grew in every UK region during 2025.
Rental yields remain strongest north of the border, where several Scottish local authorities deliver gross returns exceeding nine per cent.
At the opposite end, yields dip as low as five per cent in parts of Devon, Cambridge and the Derbyshire Dales. Average mortgage debt also varies dramatically.
London borrowers carry the heaviest load at £280,000 – nearly £70,000 more than in the South East. Northern Ireland, by comparison, records the lowest typical debt of £99,500.
Variable-rate mortgages are slightly more common in London (16 per cent) and Northern Ireland (18 per cent) than the national 12-14 per cent range, while interest-only loans are most prevalent in the capital at 12 per cent.
James Tatch, head of analytics at UK Finance, noted that recent years have tested aspiring homeowners, but the strain is far from uniform.
“Property prices, wages and demographics differ greatly across and within regions,” he said.
“All of these factors shape both affordability for buyers and returns for landlords.”
He added that a clearer picture of local markets can help policymakers and industry improve outcomes nationwide.
Joe Pepper, UK CEO of PEXA, doubled down on the for greater local insight. As the sector embraces digital tools, he argued, there is scope to build a more efficient and transparent housing market that better serves borrowers wherever they live.