UK mortgage debt hits all-time high
The October Money Statistics, produced by the Money Charity, show the average outstanding mortgage in the UK stood at £121,678 for the month of August, in 2017.
This has increased on 2013, when the figure stood at £109,487, and is the first year where the average balance on mortgages has been pushed over £120,000.
Steph Hayter, acting chief executive of The Money Charity, said: “The rising amount we owe on mortgages should be a concern to all of us. As interest rates seem likely to rise, people may soon begin to feel the effects on their wallets.
“Those with large outstanding debts, especially people with variable rate mortgages, should prepare for a time in the near future where monthly repayments will be higher.”
Driven by ever-increasing house prices, this increase in outstanding mortgage debt has been fed by longer mortgage repayment periods and larger loans – the amount of 35-year mortgage terms has increased from 2.7% in 2005 to 15% in 2017.
The charity notes that, as wages stagnate in real terms, the average first-time buyer is borrowing 3.63 times their income. Therefore, with outstanding mortgage debt rising to new levels, and higher interest rates predicted in the next month, The Money Charity is concerned that it could become harder for households to pay off such mortgages.
However, the amount of mortgage accounts with arrears has remained largely unchanged, although payments due for loans in arrears have continued to increase over the past year.