Homeowners securing a new rate on their mortgage are enjoying the most affordable borrowing conditions in nearly three years, industry analysis finds.
Stonebridge’s latest Mortgage Affordability Index shows the average borrower’s mortgage accounted for 34.3% of their salary in September – the lowest proportion since November 2022.
This is down from 34.6% in August and 40% a year earlier, the network’s research found.
Falling mortgage rates, which are down 57 basis points to an average of 4.19% over the past 12 months, are the main driver behind the improvement in affordability.
However, rising wages, which rose 4.75% in the year to September, have also made mortgage finance more affordable to the average borrower over the past year.
Mind the affordability gap
Sponsored by Newcastle for Intermediaries
Budget relief for households
Stonebridge’s Mortgage Affordability Index combines official wage and mortgage rate statistics with its own loan data to determine the relative affordability of mortgage finance in proportion to the average borrower’s earnings.
|
Month |
Mortgage repayments as % of salary |
|
Sep-24 |
40.00% |
|
Oct-24 |
38.70% |
|
Nov-24 |
36.30% |
|
Dec-24 |
36.50% |
|
Jan-25 |
37.00% |
|
Feb-25 |
37.00% |
|
Mar-25 |
36.90% |
|
Apr-25 |
37.00% |
|
May-25 |
38.90% |
|
Jun-25 |
36.50% |
|
Jul-25 |
36.10% |
|
Aug-25 |
34.60% |
|
Sep-25 |
34.30% |
|
Long-running average |
36.90% |
Rob Clifford, chief executive at Stonebridge, said: “Mortgage affordability has improved significantly over the past year, reaching its most favourable level since late 2022. Falling mortgage rates, alongside rising wages, mean borrowers are spending a smaller share of their income on housing—a welcome relief for first-time buyers and those looking to move. Looking ahead, the Bank of England is expected to cut rates in December.
“While fixed-rate mortgages are priced off swaps rather than the base rate, a lower-rate environment could encourage lenders to bring more competitive deals to market. This suggests affordability could continue to improve into 2026, provided house prices don’t rise unexpectedly.”
Inflation slowed to 3.6% in the year to October, according to the Office for National Staistics, down from 3.8% in September raising hopes that the Bank of England would cut the base rate from 4% at the next Monetary Policy Committee held on 18 December.