Story perspectives

UK Mortgage Costs Soar to 50% of Earnings Amid Housing Crisis

9/5/2025

Summary

Story summary

UK monthly mortgage repayments now account for nearly 50% of average earnings, the highest since 2008.
House prices increased by 345% over 25 years, while wages grew by only 237%, worsening affordability.
The FCA is reviewing mortgage affordability tests to aid first-time buyers without raising arrears significantly.
Construction activity is slow, with declines in civil engineering and housing, despite a rise in commercial projects.
New Zealand's property values have fallen for five months, indicating economic weakness and low market confidence.

History

Historical Context

The 2008 financial crisis, triggered by the U.S. housing bubble and subprime mortgage defaults, significantly impacted the UK housing market. House prices surged 345% from 1983 to 2008, while wages rose only 237%, creating an affordability gap. Today, nearly 50% of average earnings are spent on mortgage repayments, prompting the FCA to reconsider affordability tests for first-time buyers.

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Story summary

UK monthly mortgage repayments now account for nearly 50% of average earnings, the highest since 2008.
House prices increased by 345% over 25 years, while wages grew by only 237%, worsening affordability.
The FCA is reviewing mortgage affordability tests to aid first-time buyers without raising arrears significantly.
Construction activity is slow, with declines in civil engineering and housing, despite a rise in commercial projects.
New Zealand's property values have fallen for five months, indicating economic weakness and low market confidence.

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