Homeowners in UK are currently allocating a larger portion of their income to mortgage repayments than at any point since the 2008 financial crisis, as interest rates steadily increase towards 6 per cent. According to UK Finance, mortgage repayments accounted for an average of 20.4 per cent of borrowers' incomes between January and April. This figure is higher than the under 17 per cent recorded in 2020 and represents the highest percentage since November 2008.
The impact of significantly higher mortgage rates is expected to be particularly pronounced in London and the southeast, where borrowers have taken on larger loans. In certain areas of the southeast, over 60 per cent of mortgages obtained two years ago exceeded four times the borrowers' income, as reported by the Financial Conduct Authority. The national average for the mortgage-to-income ratio was approximately 3.4 times.
While the Government can step in to support mortgage borrowers with measures such as monthly payment policy, tax relief on mortgage and mortgage protection fund, it has rejected any suggestion.