According to UK Finance, British homeowners will spend around a fifth of their income on mortgage payments by 2025.
The trade body has today published a new Lending Where We Live report, revealing sharp differences in mortgage affordability and buy-to-let returns across the UK.
Britain’s financial analysis shows that there are large regional variations in the extent to which gross household income borrowers commit to initial mortgage repayments – a key measure of affordability.
At a UK level, homebuyers are spending on average just over a fifth (21.3%) of their gross income – the highest level since 2008.
At local authority level, borrowers in two places – North Norfolk in East Anglia (25.7%) and the London Borough of Hillingdon (25.1%) – spent more than a quarter of their gross income on mortgage repayments.
The remaining eight of the top 10 least affordable places were in the London commuter belt, in places such as Luton (24.9%), Slough (24.8%) and Spelthorne (24.8%).
At the other end of the scale, seven of the ten most affordable local authorities were in Scotland, in places like East Ayrshire and Inverclyde.
Borrowers there needed almost nine percentage points less of their gross income to cover initial mortgage payments, compared to those who borrowed in North Norfolk.
Although the City of London is predominantly a business district with limited housing stock, its high buyer profile means it is among the most affordable areas by this measure.
| Least affordable | Payments as % of income | Most affordable | Payments as % of income |
| North Norfolk | 25.7% | East Ayrshire | 17.0% |
| Hillingdon | 25.1% | Inverclyde | 17.0% |
| Luton | 24.9% | City of London | 17.1% |
| Slough | 24.8% | North Ayrshire | 17.2% |
| Spelthorne | 24.8% | West Dunbartonshire | 17.7% |
| Havering | 24.6% | Eilean Siar | 18.0% |
| Eg | 24.5% | Central Ulster | 18.2% |
| Broxbourne | 24.4% | Causeway Coast and Glens | 18.2% |
| Barking & Dagenham | 24.3% | South Ayrshire | 18.2% |
| Harlow | 24.2% | Dumfries and Galloway | 18.3% |
By 2025, 723,000 mortgages for home purchases will have been granted in Britain, an increase of 17% year on year, the trade body found.
Stamp duty surcharges, the phasing out of income tax relief for mortgage interest and stricter underwriting standards have all created challenges for the buy-to-let sector, according to UK Finance.
These factors have reduced profitability and prompted some landlords to exit the market.
Despite this, all regions of Britain saw growth buy-to-let purchasing activity in 2025, but returns varied widely.
The highest rental yields are all in Scotland, with a gross yield of over 9%.
At the other end of the scale, the lowest returns were spread across England, from South Hams in Devon (5%), through Cambridge in East Anglia (5.3%), to the Derbyshire Dales (5.3%) and Rutland (5.4%).
| Highest return | Gross rental yield (%) | Lowest return | Gross rental yield (%) |
| Renfrewshire | 9.9% | South Hams | 5.0% |
| West Dunbartonshire | 9.9% | Kensington and Chelsea | 5.1% |
| North Lanarkshire | 9.6% | Three Rivers | 5.2% |
| The city of Aberdeen | 9.6% | Cambridge | 5.3% |
| East Ayrshire | 9.6% | Harborough | 5.3% |
| Inverclyde | 9.5% | Maldon | 5.3% |
| Falkirk | 9.4% | Derbyshire Dales | 5.3% |
| Dundee city | 9.4% | Torridge | 5.4% |
| Clackmannashire | 9.3% | Rutland | 5.4% |
| South Lanarkshire | 9.3% | Rochford | 5.4% |
Reflecting regional differences in house prices, the average level of mortgage debt also varies from country to country.
In London, the average borrower has £280,000 in mortgage debt, almost £70,000 more than in the South East, the region with the second highest level. Meanwhile, Northern Ireland had the lowest average mortgage debt at £99,500.
Nationwide, 12 to 14% of borrowers in most regions have variable interest rates. However, in London the share is higher, at 16%, and in Northern Ireland it is even higher, at 18%.
The regional profile of interest-only mortgages shows a greater degree of variation. At the higher end of the scale, 12 percent of mortgages in London are interest-only, while only five percent of mortgages in the North, Yorkshire and Humber and Scotland are interest-only, and 4% in Northern Ireland.
James Tatch, head of analysis at UK Finance, said: “It has been challenging times for those trying to buy a property in recent years, with pressures on affordability weighing heavily. But the pain is not being felt equally across the country.
“Property prices, wages and demographics vary widely between and within regions. These all impact affordability and, if you are a landlord, how profitable your investment property is.
“The UK housing market faces both challenges and opportunities at national and local levels, and understanding these local markets enables better decision-making from government, local authorities and others. We look forward to continuing our work with these stakeholders to improve the mortgage market.”