Simple Breakdown of Average UK Mortgage Debt by Age

Are you keen to learn about the average UK mortgage debt by age? You’ve come to the right place for answers. Each month, over 170,000 people visit our website for guidance on debt solutions.

We’re experts in this field, and we’re here to share our knowledge with you. We’ll cover:

• The average mortgage debt in the UK.
• How the size of the mortgage market in the UK has changed.
• The regions with the highest mortgage debt.
• Changes in the average UK house price.
• Information about mortgage interest rates.

Between September 2022 and September 2023, the UK saw an average daily increase of 37 mortgages falling into arrears, exceeding 2.5% of the remaining balance.¹ So feeling worried about debt is common.

We understand your concerns, and we’re here to support you. Let’s start our journey together.

Average Mortgage Debt in the UK

The average UK mortgage debt in 2021 was £137,934.

There has been a dramatic drop in mortgage approvals in 2022 (almost 87%) mainly due to the COVID-19 pandemic.

The average price in March 2021 was £231,855.

This is a 2% increase from March 2020. The average total mortgage repayment in the UK would be between £285,000 and £385,000, depending on whether property prices and interest rates rise or fall.

Overall Size of the Mortgage Market in the UK 

As mentioned above, compared to other types of loans, such as credit cards or student loans, mortgages take up a huge portion of the debt that Brits owe.

At the end of 2019, residential mortgages in the UK were valued to be £1.5 trillion. This is a significant jump from 2018, when they were valued at £1.16 trillion. 

The value of residential mortgages has increased by 3.9% since 2019. The gross mortgage advances were valued at £65.8 billion in the first quarter of 2021 (up till March). 

This signifies a 3.8% increase since the first quarter of 2019. 

About £275 billion was borrowed in mortgage loans in 2019 alone. Compared to 2019, the value of new mortgage commitments has been 6% higher in 2021. 

As of May 2019, there are approximately 10.94 million outstanding mortgages in the UK. 

Average Mortgage UK Monthly Repayments

The amount Brits pay on average UK monthly mortgage repayments is £753.

However, because many variables come into play when working out the average mortgage cost, such as the interest rate and the length of the mortgage, it’s hard to determine a true average mortgage payment.

Using current average mortgage interest rates, you could repay between £314,810 and £385,108 – and if rates rise, that sum could be £400,000+.

I suggest looking at a mortgage affordability calculator UK for a true idea.

Where has the average UK house price increased the most?

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In 53 of the country’s 367 local authority areas, more than two-thirds of properties have seen value increases of more than £49,000 since 2016.

With 88% of homes increasing in value over the national average, Monmouthshire leads the list. Hastings comes in second with 83% of the vote, followed by Trafford with 82%.

Which region has the highest mortgage debt?

Over the previous five years, homes in the southeast have experienced the largest value gain, rising by a combined £294 billion.

Homes in London added £214 billion in value during the same period, in comparison.

With a total value of £2.4 trillion for city houses, London is the most valued region. While only 13% of British residences are in central London, it is home to a quarter of the country’s housing wealth.

Property value has risen to £1.7 trillion in the South East of England, closely followed by the East of England, which comes in at £1 trillion.

On the other hand, residences in Wales are valued at £308 billion, while those in the northeast are worth a combined £197 billion.

Mortgage Debt Solutions

There are different debt strategies that can help you manage your mortgage arrears. These are:

Debt Strategy	How It Can Help with Mortgage Arrears
One-Off Payment	Pay a lump sum, possibly from an inheritance or a bonus, to significantly reduce your overall mortgage balance.
Remortgaging	Switching to a different mortgage product or provider could result in lower monthly payments.
Hardship Schemes	Lenders often have dedicated hardship teams that assess your situation and offer individualised solutions, such as: -Payment Holidays -Mortgage Term Extension -Interest-Only Payments -Capitalising Arrears -Flexible Payment Arrangements -Fee Waivers or Reductions
Government Schemes	-Support for Mortgage Interest (SMI) -Shared Ownership Schemes -Equity Release -Local Council Support
Debt Solutions	Formal debt solutions for managing mortgage debt include Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs), Bankruptcy, and Administration Orders. Each debt solution has specific eligibility criteria and significant implications for assets and credit ratings.
Debt Advice Services	Seek free advice from debt charities who can help you assess your situation, suggest appropriate solutions and negotiate with lenders.
Sell or Rent Back	If other options aren’t viable, consider selling your property and moving to a more affordable home or renting it back.

Average mortgage interest rates 

When it comes to interest rates of mortgages in the UK, we first have to consider the lender, the applicant’s credit history, and the length of the mortgage.

The Bank of England increased interest rates to 1.25 per cent on June 16, 2022, marking the fifth increase since December 2021, when bank rates were at 0.1 per cent. As a result, the cost of a £200,000 mortgage will increase by about £312 a year (2.50% variable rate).

Additionally, this rate increase may not be the final one for the year.

On August 3, the Bank will make its next interest rate decision and may decide to increase rates once more. This could be one of the many effects of Brexit on UK mortgage rates.

If this occurs, we will continue to experience the stress of the ongoing fight against inflation, which doesn’t appear to be letting up anytime soon.

This will make it much harder for first-time buyers to get a mortgage and keep up the repayments for the length of the mortgage term.

Homeowner Mortgages vs Buy-to-Let Mortgages 

As of 2019, 86% of mortgages were given out to homeowners, whereas 14% were given to debtors using the mortgage loans for buy-to-let investments.

This signifies a shift in buy-to-let mortgage trends in the UK from 2016, when it was about 83% for homeowner mortgages and 17% for buy-to-let investments.

Buy-to-let investments refer to people that take out a mortgage to invest in a second property.

This property is then ‘let’ out to a tenant paying the debtor’s rent. 

First-Time Buyer Mortgages in the UK 

Over 351,000 first-time buyer mortgages were approved in 2019 thanks to many of the first-time home buyer schemes in the UK.

While this is a 5% decrease from the year 2018, it must be noted that 2018 had the highest number of first-time buyer mortgages since 2006 (402,800). 

In 2021 so far, the average size of a mortgage for first-time buyers is £170,301.

More than 60% of first-time buyers get mortgages that have a duration of more than 25 years. 

Remortgage rates 

Remortgaging refers to the act of taking out a new mortgage to replace your old one. This could be a new mortgage with your old mortgage provider or one with a different mortgage provider entirely. 

This may be done to raise money, lower the interest rate on a mortgage or consolidate one’s debt. 

While remortgages are often rare since they are hard to secure due to many applicants’ poor credit scores, they have increased as of December 2019. 

In December 2019, there were 16,820 new remortgages with additional borrowing. This is 5.9% more new remortgages that occurred than in the same month the year before that (2018). 

The average additional amount of money borrowed in November 2019 was £50,702. 

As for pound-for-pound remortgages without additional borrowing, 16,490 were approved in November 2019. This is about 0.5% lower than the number of pound-for-pound remortgages approved in December 2018. 

Key Takeaways 

The size of the UK’s mortgage market has remained steady throughout the last ten years despite having a few flat years in between. 

When we look at the total mortgage amount owed over the years, it has been steadily increasing, with it being £1.16 trillion in 2018 and £1.5 trillion at the end of 2019. 

Compared to credit card and student loan debt, the average interest rates on mortgages have been comparatively low. 

With a low-interest rate and a seemingly stable demand for property, the mortgage market continues to be very competitive in the UK compared to other forms of loans, such as credit cards. 

Judging by the ever-rising rate of mortgage loans in the UK, it seems as though debt due to mortgages is definitely going to be the major contributing factor to other types of debt. 

One concerning thing that should be noted is the results from research conducted in early 2021. The research aimed to find how mortgage loan money was utilised. 

As many as 40% of the debtors interviewed stated they needed the money for basic living costs. A large majority of them are having issues with managing finances.

The median household income in the UK in 2019 was £29,600.

References

1. The Money Charity – The Money Statistics February 2024