We’ve all played monopoly as kids and had fun mortgaging hotels and houses. However, what was just a game back then is a grim reality for many Brits today.
But just how many Britons have a mortgage and what are the reasons more and more people across the UK are turning to banks for property loans?
To help you better understand the mortgage market and its implications on your finances, we’ve put together some of the most relevant mortgage statistics in the UK, so make sure you keep reading.
(Money Nerd) (Bank of England)
In 2019, UK residents borrowed around £275 billion just for mortgage loans. Gross mortgage advances, on the other hand, were valued at £62.5 billion in Q3 2020. This is a decrease of 14.7% compared to the same period of 2019, as well as down from Q1 2020 when the value of gross mortgage advances was £65.8 billion.
(Money Nerd) (GOV.UK)
Although there was a decrease in mortgage approvals because of the pandemic, UK mortgage debt, statistics reveal, still reached almost £140 thousand. Considering that the average property in the UK increased by 5.4% to £245,443, this value of outstanding mortgages is not so shocking.
86% of the mortgages given out in 2019 were intended for homeowners. 14%, on the other hand, were buy-to-let mortgages. The share of the two types of mortgage in the UK has remained steady throughout the years. In 2016, 83% of mortgages were issued to homeowners, while 17% were meant for landlords.
(Bank of England) (Money Nerd)
At the end of the third quarter of 2020, the outstanding value of all residential mortgages was over £1.5 trillion, or around 2.9% higher than the previous year, Bank of England mortgage statistics show. Compared to 2018, when residential mortgage loans were valued at £1.16 trillion, this amount is a significant increase.
(Statista) (UK Finance)
Buy-to-let mortgages have been on the rise in the last couple of years. For example, in 2019, the number of this type of mortgage increased by 3.6%, putting the total number of new buy-to-let mortgages at 5,700.
(UK Finance) (Bank of England)
UK finance mortgage data shows that in December 2019 alone, there were 29.490 new first-time mortgages, which was an increase of 0.3% compared to a year before. The number of new mortgages increased as did the value of new mortgage commitments. In 2020, the value of new mortgage commitments increased by 6.8%, standing at £78.9 billion.
Back in 2017, 14.4 million households in the UK either owned their home outright (34%) or purchased it with a mortgage (28%). Judging by UK mortgage lending statistics, the share of outright owners has been higher ever since 2013.
(Office for National Statistics)
In 2018, total UK household debt amounted to £1.28 trillion, the Office for National Statistics reports. Property debt accounted for the lion’s share of this sum, amounting to £1.16 trillion or a staggering 91% of total household debt.
(Statista) (UK Finance)
In 2019, the most common reason why UK citizens got a housing loan was house moving. With this in mind, it’s not surprising that the number of home mover mortgages rose by 3.2% in December that year, resulting in 29.400 home mover mortgages completed.
With a value of €1.61 trillion (£1.5 trillion), the UK has the highest total outstanding value of residential mortgages lending in Europe. In comparison, the country with the lowest value of residential mortgage loans was Hungary, with €13.2 billion (around £1.4 billion).
At the end of 2020, the Standard Variable Rate was 3.62%, down by 0.65% compared to 2019. Furthermore, the average 2-year fixed mortgage rate stood at 1.79%, an increase of 0.37% from the previous year.
On the other hand, the base rate of interest set by BoE is 0.50%.
The average two-year fixed rate has increased across all LTV mortgages. Thus, the two-year rate increased by 1.01% for a mortgage with loan-to-value ratio of 85%, by 0.54% for 80% LTV mortgages, and by 0.35% for 75% LTVs.
Research by Statista on mortgage rate trends in the UK reveals that:
(Pure Property Finance)
Compared to today’s residential mortgage rates, the base rate recorded in the late 70s was much higher. Back then inflation and oil prices caused the base rate to go up to 17%, the highest recorded in recent history.
The share of homeowners who bought their home with a mortgage is much higher among younger age groups. Thus, 18.4% of homeowners who purchased their property with a loan were aged 25 to 34, as were 27.5% of 35-44 and 32% of 45-54 year-olds.
By contrast, UK mortgage market statistics indicate that 23% of homeowners who owned their home outright were aged between 55 and 64, as opposed to 15.6% of those who had taken out a mortgage.
Although only 5.5.% of mortgagors were aged 65 and over, it is expected that over three million people will still be repaying their home loan after their retirement at age 65.
Even more concerning, nearly 60% of the people with outstanding home loans in retirement have no plans on how to repay their mortgage, meaning they would have to remortgage to a better deal or face the risk of losing their home.
Most of the homeowners who bought their home with a mortgage were couples with at least one child, accounting for 35.4% of all homeowners with a mortgage. Couples with no children made up 25.1%, whereas the share of lone parents with at least one child was 0.7%.
Barclays’ study on mortgage statistics in the UK shows that females are becoming first-time buyers earlier than males. More specifically, the average age of female first-time buyers is 31, while for men, it is 32. However, the study also revealed that for women to buy a house, they need to spend twelve times their yearly salary, while for men, it is only over eight times.
Right after detached dwellings were semi-detached with 29.1% of them having a mortgage in 2019. What’s more, 17.8% of flats were bought with a mortgage as were 14.6% of terraced houses. Finally, new bungalows were the least likely to be purchased with a mortgage — only 0.9% of these types of dwellings had a mortgage in 2019.
The Greater London area had the highest mortgages in the entire UK. That said, the average mortgage size for first-time buyers in Greater London was £354.390 at the beginning of 2020. In comparison, the lowest mortgage was recorded in the North East, where the average mortgage was £115.835, or three times lower than the capital.
According to 2018 first time home buyer statistics, there was an increase of 1.9% in the number of first-time buyer mortgages. Incidentally, this was the highest number of mortgages recorded since 2006 when there were over 400 thousand new property loans.
Before the pandemic, the minimum deposit for a mortgage was only 5%, which has now increased by 10%, making the minimum deposit 15%. Additionally, the pandemic also increased the time it takes to approve mortgages from three to five weeks.
(Money Nerd) (The Guardian)
At the start of the pandemic, there was a drastic decline of nearly 87% in UK mortgage approvals, data shows. However, after the first lockdown was lifted, the number of mortgage approvals soared to the highest level ever recorded in 13 years. Namely, November figures show that there were 105,000 approved mortgage loans, while net borrowing went up to £5.7 billion.
Although buyer enquiries increased by 75% from the previous year, the availability of mortgage deals has declined by half, stats and facts on mortgage financing reveal. In fact, before lockdown there were 5,222 available deals, dropping to 2,526 in July 2020.
The number of approvals for remortgaging loans per month increased in February 2020 to 52.600, only to drop drastically to just 30.700 in May. The highest number of remortgage approvals was recorded in May 2018 when 53,747 monthly loans to individuals were approved.
Specifically, in December 2019, there were 16.820 new remortgages with additional borrowing, which was a rise of 5.9% compared to 2018 mortgage statistics in the UK. The average amount borrowed by remortgagers for that month was £50,702.
There were 16,490 new pound-for-pound remortgages. I.e. remortgages without additional borrowing, at the end of December 2019. This was a decrease of 0.5% compared to the previous year.
Mortgage possession claims in the UK increased by 37% in 2019, which was not the only bad news that year. The average time from claims to repossession went down from 46.6 weeks in 2018 to 39.4 weeks in 2019.
Pendle (in the North West) witnessed the highest rate of mortgage possession claims, i.e. 57 per 100,000 homes. On the other hand, London had the highest landlord possession claim rates, Ealing taking the lead with around 288 repossessions per 100,000 households.
Based on UK debt statistics from the third quarter of 2020, there were 74.850 residential mortgages in arrears of 2.5%, a 5% rise compared to the same quarter in 2019. The number of buy-to-let mortgages in arrears of 2.5% or more was also on the rise, increasing by 19% to 5,400.
In Q3 2020 alone, 160 homeowner and 230 buy-to-let mortgaged homes were taken into possession. It might seem like a large number; however, repossessions of residential mortgaged properties went down by 88% compared to Q3 2019. In the same time period, the number of seized buy-to-let mortgaged properties decreased by 77%.
Between 2018 and 2019, UK banks recorded annual growth in both the homeowner’s mortgage market and the buy-to-let market, making them the largest mortgage lenders in the UK. More specifically, bank loans in the UK increased by £7.5 billion on the residential market and by £2.7 billion on the buy-to-let market.
On the other hand, building societies recorded a decrease in lending of £1.8 billion on the full and £1.1 billion on the buy-to-let mortgage market.
Interestingly, the top five bank lenders make up to 60% of the entire mortgage market.
Lloyds Banking Group had the biggest share with 17.2% from those banks, followed by Nationwide BS with 12.6% of the market and NatWest Group with 12.5%.
Similarly, when it comes to buy-to-let mortgages, Lloyd had the most significant share of gross mortgage lending for buy-to-let purposes, lending somewhere around £5.53 billion.
Although bank lending is the most common type of lending, in the third quarter of 2020, building societies approved 111.791 mortgages, making up 28% of the total mortgage loans approved. Gross mortgage lending by building societies stood at £14.6 billion, or 24% of total mortgage lending.
The COVID-19 pandemic has certainly played a big part in the rise of mortgage loans in 2020, although property debt has been a serious issue for Brits for many years.
Hopefully, these mortgage statistics in the UK will help you understand the market better and provide some insight if you’re ever thinking of taking out a mortgage loan.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.