Monthly mortgage repayments toughest burden since 2008 financial crisis

With softening house price growth and an ongoing debate about property tax reform, exclusive analysis from INTEREST by Moneyfacts reveals the burden mortgage payments are putting on household finances.

In recent years, an average earner who has managed to save for a deposit and secure a mortgage has found that their monthly payments now consume nearly half of their gross salary. This marks the toughest financial burden since the 2008 financial crisis.

At the turn of the millennium, the average house price was £78,000—about five times the average salary of £15,800. Fast forward to 2025, and the average house price has skyrocketed to £269,000, roughly seven times the average wage of £37,600. This increase is well beyond standard lending limits.

Since 2000, wages have risen by 237%, while house prices have surged by 345%. Had wages increased at the same rate as house prices, the average salary would now be over £54,000. This disparity highlights a broader trend: house price inflation has far outpaced the rise in most household goods. For example, if bread prices rose in line with house prices, a loaf would cost around £2.28 today. A dozen eggs would set you back £4.73.

Even with today’s lowest two-year fixed mortgage rates—around 4.20% at 90% loan-to-value—an average homebuyer could save about £100 a month. However, this still accounts for roughly 38% of their gross monthly income, a similar proportion to what homeowners were paying in June 2018, even when rates were higher.

Adam French, Head of News at Moneyfacts, said:

“Affordability may have eased a touch over the past 12 months, but buying a home in 2025 is still too much of a financial stretch for many. Putting aside the not inconsiderable tasks of affording rapidly rising rent costs and saving a sizeable deposit, monthly mortgage repayments are eating up almost half of gross earnings – the toughest burden since the 2008 financial crisis.“Years of ultra-low borrowing costs, Government incentives and a lack of housing supply have driven house prices far ahead of wages, leaving many buyers caught between high prices, expensive borrowing and strict lending rules. It all means that a typical borrower today will need to take a mortgage over a 50-year term to keep their repayments to a more affordable 35% of gross monthly income.

There remains an acute risk that the market could overcorrect or overheat depending on the future path of interest rates, inflation and wage growth despite a recent softening of house price growth. We now need a period of stability where modest house price growth allows incomes to catch up so the market can return to more sustainable levels that benefit homeowners, homebuyers and the wider economy. In the meantime, it may mean holding rates where they are until inflation is in check is what is needed to nip another boom-and-bust cycle in the bud.”