Average homeowner earns enough by today to pay 2018 mortgage

16 April 2018

Halfway through April, homeowners in the UK can enjoy the fact that they have earned enough this year to cover their mortgage payments for the rest of 2018.

UK Mortgage Freedom Day is 16 April, according to high street bank Halifax.

It says that by this point in the year, the average homeowner will have earned enough to cover their annual mortgage costs. That is based on average annual mortgage repayments of £8,039 and the typical annual income of £27,724 after tax.

“Ishaan Malhi, chief executive of online mortgage broker Trussle, says: “Mortgage Freedom Day is a great reminder of just how crucial it is to think about your mortgage. Some homeowners will probably be alarmed to find out how much of their working life is spent earning enough to pay for their home.”

But those in the South may have to wait a little longer to celebrate. While those living in the North of England celebrated their Mortgage Freedom Day almost a month ago on 17 March, the average homeowner in the South East will have to wait until 27 May and those in London until 13 June.

Renters, too, will have to hold off on the celebrations for now, with the typical renter not likely to have earned enough to meet their payments for the year for a further 17 days on 3 May. London renters will have to wait until 18 July.

Andy Bickers, mortgages director at Halifax, says: “Borrowers this year have, on average, earned enough to meet their mortgage repayments for the rest of the year three days earlier than in 2017 – a positive step considering a mortgage is often the greatest financial commitment we make in a lifetime.”

Around two million UK homeowners are currently on their mortgage provider’s Standard Variable Rate, which is often more costly than other available deals. Trussle estimates that homeowners could say more than £4,500 a year in interest payments by switching to a better deal – equivalent to two months’ salary for the average person.

Mr Malhi adds: “What the day also shows is the importance of being on the right mortgage, so that you can keep your payments as low as possible and spend your salary on other worthwhile things in life.”

Copeland, in West Cumbria is the local authority to experience the earliest Mortgage Freedom Day in the year, according to analysis by Halifax, with the typical homeowner in the area having earned enough to meet their annual repayments by 24 February.

Some five of the top 10 local authorities are in Scotland, including Inverclyde and Renfrewshire.

Meanwhile, eight of the 10 local authorities with the latest Mortgage Freedom Days are in the capital. Homeowners in Brent in north-west London will have the longest wait and won’t have earned enough until 11 August.

Mr Bickers adds: “The North-South divide remains when it comes to Mortgage Freedom Day, with homeowners in the North reaching mortgage freedom up to three months earlier than their southern counterparts.”

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