Analysis of the Financial Conduct Authority’s (FCA’s) Financial Lives Survey shows that 9% of people now have over £300,000 left on their mortgage, up from 5%. The areas with the highest house prices have the largest proportion of homeowners with over £300,000 left on their mortgages, with 28% owing this amount or more compared with 17% seven years ago.
Paul Matthews, senior director of risk at Broadstone risk consultancy – which carried out the analysis – said: “It is clear that many more homeowners are taking on significant levels of mortgage debt, yet household incomes have not kept pace with the continued rises in house prices.”
He added that the increase in homeowners owing this figure demonstrated the impact of rising interest rates on consumers over the past few years, particularly in London, where homeowners typically hold bigger mortgages.
Little headroom left
Most lenders will only lend up to four-and-a-half times borrowers’ annual income, and Broadstone’s analysis shows that one in seven homeowners had mortgage debt worth at least four times their annual income. That has risen from 11% seven years ago, though saw a slight decline from 16% in 2020 and 2022.
Matthews said the figures “did not make for particularly happy reading”, adding that the survey also highlighted the fact that many consumers fail to shop around for the best mortgage deals, “despite small adjustments in monthly repayments making a significant difference over a full mortgage term”.
Why Life Insurance Still Matters – Even During a Cost-of-Living Crisis
Sponsored by Post Office
The FCA survey, which covers all aspects of British finances, highlighted a number of areas of concern over Brits’ financial resilience. One in 10 respondents have no savings, over a third saving into a pension have less than £10,000, and nearly a quarter are classed as having low financial resilience.
Sarah Pritchard, executive director of consumers and competition at the FCA, said FCA data shows that finances are “stretched for many”.
“But there are improvements – more people with current accounts and less digital exclusion. Our strategy will build on this to help people better navigate their financial lives,” she added.
