Mortgage affordability at tightest level since 2008
UK Finance has today published a new Lending Where We Live report, revealing sharp differences in mortgage affordability and buy‑to‑let returns across the UK.
Key findings
- 723,000 house purchase mortgages advanced in 2025, up 17 per cent year-on-year
- Average borrower spends 21.3 per cent of gross income on repayments
- Significant regional differences: North Norfolk and Hillingdon top the list with borrowers spending over 25 per cent of gross income
- Seven of the ten most affordable areas are in Scotland
- Buy‑to‑let yields are strongest in Scotland – almost double that of various areas in England
- London borrowers have the highest average mortgage debt at £280k
Affordability pressures highest in East Anglia and the London commuter belt
UK Finance analysis shows significant regional variation in how much of their gross household income borrowers commit to initial mortgage repayments – a key measure of affordability.
At a UK level, homebuyers spend on average just over a fifth (21.3 per cent) of their gross income – the highest level since 2008.
At a Local Authority level, borrowers in two places – North Norfolk in East Anglia (25.7 per cent) and the London Borough of Hillingdon (25.1 per cent) – spent over a quarter of their gross income on mortgage repayments.
The remaining eight of the top 10 least affordable places were in the London commuter belt, in places like Luton (24.9 per cent), Slough (24.8 per cent) and Spelthorne (24.8 per cent).
At the other end of the scale, seven of the 10 most affordable Local Authorities were in Scotland, in places like East Ayrshire and Inverclyde, with borrowers there needing almost nine percentage points less of their gross income to cover initial mortgage payments compared with those borrowing in North Norfolk.
Although the City of London is predominantly a business district with limited residential stock, its high‑earning buyer profile means it ranks among the most affordable areas on this measure.
| Least affordable | Payments as % of income | Most affordable | Payments as % of income |
| North Norfolk | 25.7% | East Ayrshire | 17.0% |
| Hillingdon | 25.1% | Inverclyde | 17.0% |
| Luton | 24.9% | City of London | 17.1% |
| Slough | 24.8% | North Ayrshire | 17.2% |
| Spelthorne | 24.8% | West Dunbartonshire | 17.7% |
| Havering | 24.6% | Eilean Siar | 18.0% |
| Harrow | 24.5% | Mid Ulster | 18.2% |
| Broxbourne | 24.4% | Causeway Coast & Glens | 18.2% |
| Barking & Dagenham | 24.3% | South Ayrshire | 18.2% |
| Harlow | 24.2% | Dumfries and Galloway | 18.3% |
Buy‑to‑let returns strongest in Scotland
Stamp duty surcharges, the progressive removal of income tax relief for mortgage interest and stricter underwriting standards have all raised challenges for the buy-to-let (BTL) sector. These factors have reduced profitability and prompted some landlords to exit the market.
Despite this, all regions of the UK saw growth in BTL purchase activity in 2025 but returns vary widely.
The highest rental yields are all located in Scotland where you can get a gross yield of over nine per cent.
At the other end of the scale, the lowest returns were scattered across England, from South Hams in Devon (5 per cent), to Cambridge in East Anglia (5.3 per cent), to the Derbyshire Dales (5.3 per cent) and Rutland (5.4 per cent).
| Highest return | Gross rental yield (%) | Lowest return | Gross rental yield (%) |
| Renfrewshire | 9.9% | South Hams | 5.0% |
| West Dunbartonshire | 9.9% | Kensington & Chelsea | 5.1% |
| North Lanarkshire | 9.6% | Three Rivers | 5.2% |
| Aberdeen City | 9.6% | Cambridge | 5.3% |
| East Ayrshire | 9.6% | Harborough | 5.3% |
| Inverclyde | 9.5% | Maldon | 5.3% |
| Falkirk | 9.4% | Derbyshire Dales | 5.3% |
| Dundee City | 9.4% | Torridge | 5.4% |
| Clackmannashire | 9.3% | Rutland | 5.4% |
| South Lanarkshire | 9.3% | Rochford | 5.4% |
Note: Gross rental yield calculated as actual or expected annual rent income divided by purchase price
Type of mortgage and outstanding debt
Reflecting regional differences in house prices, average levels of mortgage debt also vary across the country.
In London, the typical borrower has £280,000 of mortgage debt, almost £70,000 more than in the South East, the region with the next highest level. Meanwhile, Northern Ireland had the lowest average mortgage debt at £99,500.
Across the country, 12 to 14 per cent of borrowers in most regions are on variable rates. However, in London the proportion is higher at 16 per cent and Northern Ireland is higher still at 18 per cent.
The regional profile of interest-only (IO) mortgages shows a larger degree of variation. At the higher end of the scale, 12 per cent of mortgages in London are IO, while just five per cent of mortgages are IO across the North, Yorkshire and Humber and Scotland, and four per cent in Northern Ireland.
James Tatch, Head of Analytics at UK Finance, said:
“It’s been challenging times for those trying to buy a property in recent years, with affordability pressures weighing heavy. But the pain is not felt equally across the country. Property prices, wages and demographics vary greatly across and within regions. All of these have an impact on affordability and if you’re a landlord, how profitable your investment property is.
“The UK housing market faces both challenges and opportunities at a national and local level, and understanding these local markets enables better decision making from government, local authorities and others. We look forward to continuing our work with these stakeholders to improve the mortgage market.”
Joe Pepper, UK CEO of PEXA, said:
“This report highlights how much the homebuying experience varies across the UK, underlining the importance of understanding local markets to support better decision-making. As the industry continues to digitise, there is a real opportunity to create a more efficient, transparent and responsive housing market for borrowers across the country.”
Mary-Lou Press, President of NAEA Propertymark (National Association of Estate Agents), comments:
“Buying a home is becoming increasingly difficult for many households, with mortgage affordability now stretched to levels not seen since 2008.
“Higher interest rates and the challenge of saving for a deposit mean many people who could afford monthly repayments are still locked out of buying. It’s no longer just about income; access to upfront cash is becoming the biggest barrier.
“Property professionals are also seeing clear regional differences. In more affordable parts of the UK, buyers are still active, but in higher-value areas such as London and the South East, stretched affordability is having a much greater impact, slowing activity and forcing buyers to adjust expectations.
“There’s still strong demand to own a home, but without changes to lending rules and more homes being built, many first-time buyers may continue to struggle to get on the ladder.”
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