Interest rates are through the roof – but where in the UK are homeowners being squeezed the most? Find out with Access Legal
Access Legal | Resource | 22 September 2023
Soaring mortgage costs mean that homeowners in Oxford could be paying as much as 85% of their household income on monthly repayments.
The desirable university city has topped a list of the most expensive places to live in the UK as ongoing interest rate hikes push the average cost of a fixed-rate deal to almost 7 per cent.
Just behind Oxford is Bath, where households can now expect to spend 82 per cent of their income on mortgage costs, followed by London at just over 79 per cent.
Nationally, a couple on a 7 per cent fixed-rate deal could expect to pay around 43 per cent of their salary on mortgage repayments, with a joint pre-tax salary of £63,000 and a house worth around £297,000. Unsurprisingly, the most expensive locations are in the South, while the most affordable are in the North.
In Oxford, house prices are almost double the national average at just under £600,000 yet a combined salary is only just above average at £66,618.
With a 7% fixed-rate deal, householders in Oxford would need to earn eight times their joint salary to afford their current home, while those in Bath and London would have to earn 7.66 and 7.2 respectively. Given that lenders normally apply a 4.5 income multiplier, buyers in the most expensive locations could struggle to remortgage when their deal ends.
10 least affordable towns and cities
Town / city
Proportion of income a household would need to spend on mortgage repayments*
Oxford
85.01%
Bath
81.88%
London
79.21%
Brighton
77.75%
Watford
70.22%
Poole
69.23%
Cambridge
63.30%
Guildford
62.01%
St Albans
60.99%
Bournemouth
59.47%
*Based on a 2-year fixed rate deal at 7%
Legal Bricks also uncovered the most affordable places to live in the UK – with Darlington coming top, followed by Hartlepool and Middlesborough.
Even with a 7% mortgage deal, homeowners would typically spend less than 30% of their income on housing, and it drops to just over a quarter in Darlington.
Property prices in the most affordable three locations are significantly lower than the national average – £153,505 in Darlington, £151,759 in Hartlepool, and £167,885 in Middlesbrough.
However, all three of the County Durham towns suffer from above-average deprivation, and home repossessions in the area have been among the highest in the UK, at more than 24 per 100,000 households.
10 most affordable towns and cities
Town / city
Proportion of income a household would need to spend on mortgage repayments*
Darlington
26.01%
Hartlepool
27.02%
Middlesbrough
27.04%
Gateshead
27.41%
Aberdeen
28.03%
Doncaster
28.16%
Wigan
28.58%
Dundee
29.26%
Bradford
29.49%
Rotherham
29.53%
Mike Connolly, director of Legal Bricks, an Access Legal company, said: “It’s difficult to believe that the average two-year fixed deal was just 2.34% in December 2021. Now homeowners are facing crippling mortgage costs – with some having to find an extra £1,000 a month, on top of higher food and energy costs.
“Our analysis reflects the North-South divide in the housing market and while some areas are more affordable than others, households are still being squeezed. Demand for housing is still strong but it will be interesting to see how the nation adapts. Will they downsize, rent out rooms, or move to a town or city they hadn’t previously considered?”
