UK homeowners will spend almost a fifth of their income on house payments by 2025, according to UK Finance.
The trade body has today published a new report on mortgages where we live, revealing sharp differences in property purchases and buy-to-let returns across the UK.
Analysis of UK finance shows huge regional differences in how much gross household income borrowers commit to paying their mortgage – a key measure of affordability.
At UK level, consumers spend on average just over a fifth (21.3%) of their total income – the highest level since 2008.
At local authority level, borrowers in two areas – North Norfolk in East Anglia (25.7%) and the London Borough of Hillingdon (25.1%) – spent a quarter of their total income on mortgage repayments.
The remaining eight of the top ten cheapest places were in the London commuter belt, in areas such as Luton (24.9%), Slough (24.8%) and Spelthorne (24.8%).
At the other end of the scale, seven of the 10 most affordable local authorities were in Scotland, in areas such as East Ayrshire and Inverclyde.
Borrowers there needed about nine percentage points less of their gross income to make mortgage payments compared to borrowers in North Norfolk.
Although the City of London is mainly a business district with limited residential properties, its high income buyer profile means it ranks among the most affordable areas on this scale.
| Inexpensive | Fees as % of revenue | Very affordable | Fees as % of revenue |
| 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% |
| The Spelthorn | 24.8% | West Dunbartonshire | 17.7% |
| Catching up | 24.6% | Eilean Siar | 18.0% |
| Harrow | 24.5% | Mid Ulster | 18.2% |
| Broxbourne | 24.4% | The Causeway Coast & Glens | 18.2% |
| Barking & Dagenham | 24.3% | South Ayrshire | 18.2% |
| Harlow | 24.2% | Dumfries and Galloway | 18.3% |
There were 723,000 UK buy-to-let homes in 2025, up 17% year-on-year, the trade association found.
Additional stamp duty charges, the continued removal of income tax on mortgage interest and tighter underwriting standards have all raised challenges for the property sector, says UK Finance.
These factors have reduced profitability and forced some homeowners out of the market.
Despite this, all regions of the UK saw growth in buy-to-let activity by 2025 but returns varied widely.
The highest rental yield is found in Scotland with a gross yield of over 9%.
At the other end of the scale, the lowest returns were scattered across England, from the South Hams in Devon (5%), to Cambridge in East Anglia (5.3%), to the Derbyshire Dales (5.3%) and Rutland (5.4%).
| High return | Total employment benefit (%) | Very low returns | Total employment benefit (%) |
| Renfrewshire | 9.9% | The 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% | The Derbyshire Dales | 5.3% |
| Dundee City | 9.4% | The Tridge | 5.4% |
| Clackmannanshire | 9.3% | Rutland | 5.4% |
| South Lanarkshire | 9.3% | Rochford | 5.4% |
Reflecting regional differences in housing prices, average mortgage debt levels also vary across the country.
In London, the average borrower has £280,000 of mortgage debt, almost £70,000 more than the South East, the region with the next highest rate. At the time, Northern Ireland had the lowest average mortgage debt of £99,500.
Nationwide, 12 to 14% of borrowers in most states have variable rates. However, in London the proportion is higher at 16% and Northern Ireland is still higher at 18%.
The regional profile of interest-only loans shows a large degree of variation. At the lower end of the scale, 12 per cent of loans in London are interest-only, while just 5 per cent of loans are interest-only in the North, Yorkshire and the Humber and Scotland, and 4% in Northern Ireland.
UK head of financial research James Tatch said: “It has been a challenging time for those trying to buy property in recent years, with affordability pressures on, but the pain is not being felt equally across the country.
“Property prices, wages and demographics vary greatly from state to state.
“The UK housing market faces challenges and opportunities at national and local level, and understanding these local markets helps make better decisions for government, local authorities and others. We look forward to continuing our work with these stakeholders to improve the housing market.”
