UK mortgage statistics and facts: 2023

This mortgage statistics and facts 2023 report details everything you need to know about the UK’s mortgage market right now. 

First, let's define what a mortgage is:

A mortgage is a loan used to buy a home or borrow money against the value of a home you already own. A lender, usually a bank or building society, loans you a large sum of money over a set period, known as the mortgage term. 

Interest is charged on the loan, so you pay more back than what you borrowed. The terms of  a mortgage loan also give the lender the right to repossess (take back) your property, if you fail to keep up with the mortgage repayments.

An overview of mortgage statistics in the UK

• The total value of mortgage lending in the UK is the highest it has been since 2007, with 2021 seeing a total gross mortgage lending of £315.95 billion.

• Mortgage approvals in the United Kingdom fell from 74,425 in August 2022 to 35,612 in December.

• 65.1% of the UK population are owner-occupants, with or without a mortgage as of 2019.

• In November 2022, the 10-year fixed mortgage rate was at its lowest at 2.2%. 

• The average UK house price in November 2022 was £294,910, up by 10.3% compared to the previous year. 

• The UK demonstrates a mean salary to average house price ratio of 1:9.1.

• The average value of mortgages saw a height of £193,000 in Q2 of 2021.

• England sees an average monthly mortgage payment of £753 compared to a £795 median monthly rent payment from April 2021 to March 2022.

• Arrears account for just 0.78% of outstanding mortgages, the lowest level since 2007.

• Between 2020-2021 the average age of a first-time buyer excluding London was 33.4. 

• Over 2022 there were 370,287 first-time buyers in the UK, a 9.3% decrease from 2021

What is the size of the mortgage market in the UK?

The total value of mortgage lending in the UK is the highest it has been since 2007, with 2021 seeing a total gross mortgage lending of £315.95 billion. Mortgage lending has been increasing year-on-year since 2012, with a slight decline in 2020 due to the coronavirus (COVID-19) pandemic.

Due to the easing of restrictions (leading to a release of pent-up demand for houses) and the rapid increase in property prices in the UK, the 2020 decline was met with a sharp increase in mortgage lending in 2021, going from £249.11 billion to £315.95 billion.

The total value of gross advances in the first quarter of 2022 was £76.9 billion, an increase on the last two quarters of 2021. The average UK mortgage debt was £137,934 in 2021. 

What is the ratio of homeowners to those with an outstanding mortgage?

As of 2019 figures, 65.1% of the UK population are owner-occupants, with or without a mortgage. This means that 65.1% of the UK are homeowners with or without outstanding mortgages or loans. 

37.5% of the UK population are homeowners with mortgages or loans. 27.6% of the UK population are homeowners without outstanding mortgages or loans.

How many mortgages were approved in 2022?

Mortgage approvals in the United Kingdom have been falling since the beginning of 2022, but have been falling even more so in recent months.

The number of mortgage approvals in December 2022 stood at 35,612, the lowest in over a year.

This has fallen by just over half since July 2021, when there were over 76,000 mortgage approvals.

The rate of mortgage approvals in the UK also dropped in May 2020, during the height of lockdown restrictions. The Bank of England took a stricter approach when approving loans for potential buyers. This, coupled with a higher unemployment rate (meaning fewer people were eligible for mortgages), saw approvals drop to just 9,435.

How have UK mortgage interest rates changed?

Since 2009, mortgage rates in the United Kingdom had been declining, which was good news for first-time home buyers and remortgagers. In September 2021, the average 2-year, 75% LTV fixed mortgage rate was at its lowest at 1.2%. 

However, with inflation sharply on the rise, the Bank of England has increased interest rates six times so far in 2022, resulting in significantly increased mortgage rates.

The average for a two-year 75% LTV mortgage is up to 5.43% for a fixed-rate deal, and 4.07% for a variable rate, as of December 2022.

Rising mortgage rates will likely result in a decline in borrowing, which may curb demand for housing and slow down the dramatic increase in house prices seen since the start of the pandemic.

What was the average UK house price in 2022?

The average UK house price in November 2022 was £294,910, up 10.3% compared to November 2021.

Average house prices have increased over the year from November to November in England by 10.9% (up to £315,073), in Wales by 10.7% (up to £220,366), in Scotland by 5.5% (up to £191,492), and in Northern Ireland by 10.7% (up to £176,131).

How does the average UK house price compare to the average UK salary?

The mean salary in the UK in 2021 was £31,285. The average UK house price as of June 2022 is now £286,000. The UK demonstrates a ​mean salary to average house price ratio of 1:9.1.

Within England, the North East shows the closest equality between mean salary and average house price. This is still a ratio of 1:5.9 (salary : house price). London demonstrates the lowest equality, with a ratio of 1:14.3.

What is the average value of a mortgage in the UK?

The average value of mortgage loans granted in the UK has risen from around £161,000 to £175,000 between Q1 of 2020 and Q3 of 2021. This increase correlates with the housing price increase observed since the start of the pandemic. The average value of mortgages reached a height of £193,000 in Q2 of 2021.

Monthly mortgage payments vs rental payments in England

The cost of renting appears to be significantly greater than mortgage payments throughout the UK. In England, the average monthly mortgage payment is £753 compared to a larger £795 average monthly rent payment.

Greater London shows the largest disparity between monthly rent and mortgage payments. The average rent in Greater London is £1,458 per month, compared to an average monthly mortgage payment of £1,280, a dramatic difference of £178 a month. 

The East of England shows the lowest difference between rent and mortgage payments. The average monthly rent in the East is £865 and the average monthly mortgage payment is £862, a mere £3 monthly difference.

What is the number of mortgages in arrears in the UK?

Mortgages in arrears refer to when the borrower fails to make contractual payments equivalent to at least 1.5% of the outstanding mortgage balance. 

The value of outstanding balances with arrears in the third quarter of 2022 is £13.1 billion. This is a reduction from the previous quarter. As a %, arrears account for just 0.78% of outstanding mortgages, the lowest level since 2007. 

Generally speaking, arrears are becoming less common in the UK. The number of loan accounts in arrears, the total value of outstanding balances, and the balances as a % of total loan balances have all been steadily decreasing since 2007. 

What is the average age for a first-time buyer in England?

The average age of first-time buyers in England has stayed relatively stable over the last five years, declining slightly. However, outside of London, it’s currently the highest it has been for some time, at 33.4. 

The average age of first-time buyers in London reached a peak of 36.7 during 2018-19 but has now reduced to 33.8 as of 2021-2022.

What is the average age for paying off your mortgage in 2022?

The average age for paying off your mortgage depends on when you buy your first home and how long your mortgage loan is for. Typically, you will enter into a 30 or 40-year mortgage agreement with your lender. Using the average age of first-time buyers, we can estimate the average age at which UK residents will pay off their mortgages depending on whether they are in London or not and how long their mortgages are.

How many mortgages have been granted to first-time buyers in the UK?

Over 2022 there were 370,287 first-time buyers in the UK, a 9% decrease from 2021 which saw a high of 408,379.

Generally, the number of first-time buyers in the UK has risen since 2015, seeing a significant dip in 2020 before an equally significant increase to a peak level in 2021. 

This is likely due to first-time buyers holding off from purchasing their new homes during the pandemic in 2020. Pent-up demand was then released in 2021, causing unusually high numbers of first-time buyers. 

Repayment vs interest-only mortgage

Repayment mortgage

Mortgages fall into the category of repayment or interest-only mortgages, but repayment mortgages are far more popular. 

With a repayment mortgage, you pay back some of the money you’ve borrowed each month, in addition to interest applicable to that chunk of the loan. This allows you to build equity (ownership) over time and eventually fully own your home.

Interest-only mortgage

An interest-only mortgage requires you to pay just the interest each month on the amount you’ve borrowed. None of the capital (money you’ve borrowed) is repaid during the mortgage term, instead, you pay back the full amount at the end.

This type of mortgage is rarely used to purchase a residential home and is usually used for investment property purchases, such as buy-to-lets. 

Fixed-rate mortgages vs. variable-rate mortgages

Fixed-rate mortgages

With a fixed-rate mortgage, the interest rate is fixed for the duration of the deal. This means your repayments won’t be affected by market fluctuations or when the Bank of England base rate rises or falls. 

If you take out a fixed-rate mortgage, you are locked into the introductory rate for an agreed period (usually 2-5 years), and you’ll likely encounter exit fees if you want to leave early. 

At the end of the introductory period, you’ll switch to a standard variable rate (SVR), which is often higher and can fluctuate. Many people remortgage after their introductory period ends so they can get a better deal.

Variable rate mortgages

A variable rate mortgage is where the interest rate on your mortgage can fluctuate at any time, either up or down. This means how much you pay each month can change significantly and is affected by a variety of factors, with the main factor being changes to the Bank of England’s (BoE) base interest rate. 

There are several types of variable rate mortgages, the standard variable rate (SVR), which is set by the lender, a discount rate mortgage, which offers a discount on the SVR, and a tracker rate, which is set by an external financial indicator, usually the BoE base rate.  

Affordable home ownership schemes

In England, the Help to Buy scheme was set up to help people become homeowners. This was by introducing Help To Buy ISAs, an equity loan scheme, and the shared ownership scheme. 

A Help To Buy ISA allowed first-time buyers to save for a deposit with the government boosting any savings held by 25%. The Help To Buy ISA has now closed to new applicants, however, those who already have one can pay into it until November 2029.

The Help to Buy Equity Loan Scheme allows people in England and Wales to borrow up to 20% (40% in Greater London) of the property’s value from the government. 

This can help you to secure a better mortgage deal, for example, you could secure a 75% mortgage with only 5% of the 25% deposit coming from your own pocket. Applications for the Help To Buy Equity Loan Scheme closed on 31 October 2022.

If you applied before this date, your application will still be processed if you complete the purchase of your home by 31 March 2023. However, the scheme has been extended in Wales, from 1 April 2023 to 31 March 2025.

The Lifetime ISA (LISA) is very similar to the Help To Buy ISA in the sense that the government tops up your savings by 25%. The main difference between the two is that the Help To Buy ISA only allows you to save up to £2,400, whereas the LISA allows up to £4,000. To open a LISA you must be 18 or over and under 40.

Shared Ownership is still an option for anyone who cannot afford the cost of a mortgage loan for an entire property. The shared ownership scheme allows you to buy between 10 –75% of a property. You will make mortgage repayments on the share of ownership you purchase, and pay rent to a housing association on the remaining share.

In Scotland, there is a Low-Cost Initiative for First-Time Buyers (LIFT), which falls into two categories; the Open Market Shared Equity scheme and the New Supply Shared Equity scheme. These generally involve the Scottish Government holding a share of your home so you can pay less upfront. Depending on the type of property (open market or new supply) this can be anywhere between 10% - 40%. 

The future of the UK mortgage market

On February 2nd, 2023, the Bank of England increased its base interest rate to 4%, its highest in 14 years. Higher interest rates are used to battle inflation, which is currently at a 40-year high in the UK.

Over the next few months, there could be further base rate increases. However, while mortgage rates will normally increase as a result of this, rates for many fixed and variable deals have been declining in recent months. This is partially due to a price correction following the rate spike after the September mini-budget, but also due to competition between lenders. 

Although mortgages will generally become less affordable during rapid inflation and soaring energy costs. Homeowners are feeling the pinch and many may struggle to afford their homes. Experts predict house prices could fall over the next year.

As of January 2023, Nationwide reported that house prices had fallen for the fifth month in a row, dropping 0.6% compared to December.

Similarly, Halifax reported a fourth month in a row of price drops in December 2022, dropping 1.5% compared to November.

Year-on-year growth has been slowing too and is close to hitting 0%, with experts predicting that the market will remain subdued in the coming months.

Timeline of events

16th December 2021 - Bank of England raises interest rates to 0.25% to combat the surge in inflation.

March 2022 - Annual U.K. inflation hit a 30-year high of 7% due to the Russia-Ukraine war and COVID lockdowns in China.

1st April 2022 - Energy price cap increased by 54%. UK inflation hits a 40-year high of 9%.

5th May 2022 - The pound hits a low of 1.2393 against the dollar, its lowest level since July 1st 2020. The Bank of England increases interest rates to 1%.

16th June 2022 - Bank of England estimates inflation will hit 11% in October and raises interest rates to 1.25%.

4th August 2022 - Bank of England Rate increased to 1.75% as the UK sees a near doubling in wholesale gas prices since May, due to Russia’s restriction of gas supplies to Europe.

22nd September 2022 - Interest rates increased to 2.25%.

23rd September 2022 - Mini-budget announced.

26th September 2022 - UK government bond yields soar and the pound hits a record low of $1.0350.

28th September 2022 - The Bank of England temporarily buys up £65 billion worth of UK government bonds “to restore orderly market conditions”.

14th October 2022 - Truss sacks Chancellor Kwasi Kwarteng and the Bank of England stops buying bonds.

17th October 2022 - New Chancellor Jeremy Hunt reverses the majority of the mini-budget.

20th October 2022 - Truss resigns.

3rd November 2022 - Base rate rises to 3%.

15th December 2022 - Base rate rises to 3.5%.

3rd February 2023 - Base rate rises to 4%, highest in 14 years.