‘Challenging times’ for homebuyers – mortgage affordability tightest since 2008

Mortgage affordability for homebuyers was at its tightest since 2008 last year, according to an industry body.

Homebuyers across the UK typically spent just over a fifth (21.3%) of their gross income on their mortgage payments last year, the highest level since 2008, UK Finance said.

In North Norfolk in East Anglia and the London borough of Hillingdon, new borrowers typically spent over a quarter of their gross income on mortgage repayments.

The least affordable local authority in 2025 was North Norfolk, where homebuyers needed 25.7% of gross income typically to cover initial mortgage payments, UK Finance said.

London commuter belt areas such as Luton (24.9%), Slough (24.8%) and Spelthorne (24.8%) were also identified as being among the least affordable areas.

The most affordable local authorities were in Scotland, including East Ayrshire and Inverclyde.

UK Finance said that although the City of London is predominantly a business district with limited residential stock, its high‑earning buyer profile means it ranks as relatively affordable.

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.”

UK Finance said 723,000 house purchase mortgages were handed out in 2025, marking a 17% annual increase.

Earlier this year, mortgage rates jumped amid market uncertainty because of the conflict in the Middle East. Mortgage rates have been gradually easing down in recent weeks, but remain elevated.

Mary-Lou Press, president of NAEA (National Association of Estate Agents) Propertymark, said: “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.”

Here are the least affordable areas identified by UK Finance, with mortgage payments as a percentage of income:

1. North Norfolk, 25.7%

2. Hillingdon, 25.1%

3. Luton, 24.9%

=4. Slough, 24.8%

=4. Spelthorne, 24.8%

6. Havering, 24.6%

7. Harrow, 24.5%

8. Broxbourne, 24.4%

9. Barking and Dagenham, 24.3%

10. Harlow, 24.2%

Here are the most affordable areas identified by UK Finance, with mortgage payments as a percentage of income:

=1. East Ayrshire, 17.0%

=1. Inverclyde, 17.0%

3. City of London, 17.1%

4. North Ayrshire, 17.2%

5. West Dunbartonshire, 17.7%

6. Eilean Siar, 18.0%

=7. Mid Ulster, 18.2%

=7. Causeway Coast & Glens, 18.2%

=7. South Ayrshire, 18.2%

10. Dumfries and Galloway, 18.3%