Lloyds data shows house price affordability at 11-year low for UK buyers

The gap between UK house prices and earnings has narrowed to its lowest point in over a decade, according to research published by Lloyds. The findings carry direct implications for how mortgage brokers frame affordability conversations with first-time buyers and home movers.

Lloyds’ Affordability Review was compiled in partnership with S&P Global, drawing on the bank’s own House Price Index (HPI) methodology and ONS earnings data. It puts the national house price to income ratio at 7.3, down from 7.6 a year ago — the lowest reading since 2015.

Earnings growth was the primary driver, rising 4.5% to £40,790 over the past year. Property values, by contrast, barely moved — up just 0.5% to £299,131. That divergence has been enough to shift the ratio meaningfully in buyers’ favour.

“There are some encouraging signs for people looking to buy a home,” said Andrew Asaam, mortgages director at Lloyds. “Wages have continued to rise while house prices have remained relatively stable, helping to narrow the gap between earnings and house prices.”

How has first-time buyer affordability changed?

For first-time buyers, the picture has moved in a similar direction. The price-to-income ratio for a typical first-time buyer property fell from 6.1 to 5.9, also the lowest since 2015. That market segment’s average property value edged up just 0.3% to £239,681.

Despite the improvement, the deposit barrier remains formidable. The deposit alone demands the equivalent of roughly £24,000 at a 10% level. Average monthly mortgage repayments have also risen, up from £1,100 to £1,150 over the past year.

Asaam acknowledged the difficulty: “Affordability remains stretched for many households. Mortgage rates are higher than they were a year ago and saving for a deposit continues to be one of the biggest barriers facing first-time buyers.”

Average rents across Great Britain have moved up 3.2% to reach £1,382 per month, against a first-time buyer monthly repayment of £1,150. Mortgage costs now account for around 34% of income for an average first-time buyer, compared with 41% for equivalent renters. For clients who can clear the deposit hurdle, the monthly cost case for buying over renting is strengthening.

Brokers exploring this conversation with clients may find the widening selection of low-deposit mortgage products now available in the UK a useful starting point.

Regional data: where does affordability vary most?

The regional picture offers some of the most actionable data in the Lloyds research for brokers with clients weighing up where to buy.

The South East recorded the steepest improvement, with the average home falling from 9.7 to 9.1 times earnings. Greater London dropped from 10.9 to 10.3. Despite those gains, both regions remain the least affordable in the country. The North East, at 5.0, and Scotland, at 5.3, continue to represent the most accessible markets.

At a local authority level, Inverclyde and Aberdeen each record a price to income ratio of 3.5, making them the most affordable areas in Britain. Elmbridge in Surrey, at 17.4, and Kensington and Chelsea, at 17.3, sit at the opposite extreme.

“Where you buy continues to make a huge difference to affordability,” Asaam said. “For first-time buyers in particular, a small shift in location could make a big difference – not just in getting on the ladder, but in what kind of property is within reach.”

Several traditionally expensive areas saw some of the sharpest affordability improvements. Westminster’s ratio dropped from 15.2 to 13.3; Cambridge from 11.4 to 10.0. Conversely, Northern Ireland was the only nation or region to become less affordable, with house price growth of 7.4% outpacing earnings growth of 3.7%.

What do higher borrowing costs mean for clients?

The most significant caveat in the Lloyds data is the trajectory of mortgage costs. Average monthly repayments across all buyers rose by £57 over the past year to £1,157, reflecting the higher interest rate environment. Although the price-to-income ratio has improved, clients are paying more each month to service the debt.

A falling ratio indicates that buyers can qualify for a mortgage on a wider range of properties relative to their salary. It does not, by itself, mean the monthly commitment has become easier to carry. Brokers should be prepared to explain this distinction clearly, particularly to clients who assume a headline affordability improvement translates directly to lower monthly outgoings.

This dual pressure — improving house price affordability alongside higher borrowing costs — is the core tension brokers must navigate in client conversations.

Forecasts heading into 2026 suggested wage growth would continue to outpace house price inflation. Conditions expected to favour first-time buyers as prices and lending conditions gradually ease appear to be reflected in today’s data. The broader shift in first-time buyer access, driven by evolving lender support and FCA rule changes, means the market is more navigable than it was a year ago. Brokers are well placed to help clients weigh up whether this autumn is the right moment to act on improving UK mortgage affordability conditions. The latest FCA-backed changes expanding first-time buyer access add further options to that conversation.