Wage growth and lower interest rates ease pressure on monthly repayments
Mortgage repayments have become slightly more manageable for borrowers in the UK, reaching their most affordable level this year, new figures from Stonebridge have revealed.
The mortgage and protection network’s latest Mortgage Affordability Index, released bi-monthly, showed that the average borrower spent 36.9% of their salary on mortgage repayments in March. That marks a slight improvement from the 37% recorded in both January and February. December’s figure was 36.5%, while the long-term average stands at 35.9%.
The modest improvement in March was attributed to a small increase in wages and a minor drop in mortgage rates.
According to Stonebridge, the typical loan amount rose to £194,372 in March — a 0.8% increase from February and the highest figure since October 2024. Wage data from the Office for National Statistics indicated a 0.5% rise in average earnings, while Bank of England data showed the average mortgage rate dipped slightly to 4.5% from 4.53%.
The Mortgage Affordability Index combines public wage and mortgage rate data with Stonebridge’s internal loan figures to track how affordable mortgages are relative to borrower income.
“Mortgage affordability improved slightly in March, but after a turbulent three years, even such modest progress matters,” said Rob Clifford (pictured), chief executive of Stonebridge. “Our affordability index shows that stability is returning to the market, and with it, an appropriate sense of confidence. That shift in sentiment is just as important as the headline numbers.
“The good news is that the outlook for borrowers looks increasingly positive. The Bank of England’s recent rate cut — and that further cuts are very likely — has given lenders the confidence to reduce pricing even further. Several high street banks have launched sub-4% mortgage deals, and competition is increasing across the market and delivering consumer benefits.
“We’re still some way from a fully-fledged recovery in market activity, but momentum is clearly building. For brokers, any positive pricing and market news is always an opportunity to engage with existing customers and continue to strengthen that relationship – and deliver even better consumer outcomes.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
