Average mortgage payments increase by £47 over a year

New data analysis by Hargreaves Lansdown has found that in 2023/24, 30% of people had a mortgage, 35% owned outright, 19% rented privately (32% in London) and 16% rented from the social sector.

The average weekly mortgage payment in England was £222. Outside London, it was £209 (up £47 in a year) and in London it was £317 (up £71). The average weekly private rent was £237 a week (£368 in London). Those with a mortgage spent 19% of their household income on mortgage payments, whereas private rent payments, with housing support excluded, were 39% of income.

In 2023-24, the average age of first-time buyers was aged 34 – up from 32 in 2019/20. 48% of first-time buyers were couples with no children, 26% were single and 21% were couples with children. Most first-time buyers (85%) paid the deposit with savings, 31% got help from family or friends, while 9% used an inheritance.Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “More people are renting later in life, and paying a horrible price for it. Parents are sharing the pain too, putting their own needs on hold for far too long as they carry the cost of housing their offspring. Life is painful at the sharp end of rising house prices and more expensive mortgages.

“The proportion of people renting privately doubled during the 2000s, and while it has levelled off at around a fifth of households (a third in London), we’re seeing people renting later in life. Even when people reach their late 50s and early 60s, 11% are still in private rentals.

“We’re paying a huge price for this, because even after the rise of mortgage rates, in 2023/24 renting was more expensive than paying the mortgage. The average weekly mortgage payment in England was £222. Outside London, it was £209 (up £47 in a year) and in London was £317 (up £71).

“Given that those with mortgages tend to have higher incomes, the burden on renters was horrendous. On average, people with a mortgage spent 19% of their household income on mortgage payments, whereas private rental payments, excluding housing support, made up an eye-watering 39% of income. And the costs aren’t just financial. Renters also tend to move far more often, which makes it difficult to put down roots. This can cause problems for everyone, especially if rising rents force them into a continual cycle of renting smaller homes, further from work. It also raises particular issues for the 34% of private renters with children (up from 30% in 2022/23), who risk having to uproot them from school when their tenancy comes to an end.

“As a result of the fact that rent is so expensive, tenants have their budgets stretched horribly thin. There’s a real struggle to make ends meet, let alone save for the future, which is one reason why only 52% of them have savings. It makes saving up for a property deposit incredibly difficult.

“This reflects the findings of the HL Savings and Resilience Barometer, which found renters were less likely to have money left over at the end of the month, and less likely to have savings to fall back on. On average, they have just £79 left at the end of the month.

“Their parents are paying the price too, because with their children at home for longer, they face higher costs. It’s often the empty nest period when parents will focus on their pension savings, so there’s a risk this means they have to work longer to build their pension, or that they retire with less to go around.

“They are also playing a key role in helping their children onto the property ladder. The Bank of Mum and Dad (and other family and friends) helped 31% of first-time buyers onto the property ladder. For those who can afford to help, it’s brilliant to be able to give your offspring a good start in life. It’s also often a far more positive stage to help than the 9% who have had to wait for an inheritance to get them onto the property ladder.

“However, parents need to be aware of the costs involved. If they are dipping into the equity in their home, it may well mean paying their own mortgage for longer. If they’re spending their savings, they need to be sure they still have enough for emergencies, and if they’re spending a lump sum from their pension, they need to be aware of the impact on their retirement income. Because while we always want to help our offspring, it’s not going to help anyone if we damage our own financial resilience irreparably in the process.

“The combination of over-stretched renters and higher house prices means the average age of a first-time buyer has hit 34. It’s hardly surprising it takes so long to save up when you consider that the average deposit was £55,372.

“It means the door is closing on all sorts of would-be buyers. It becomes far more difficult to buy alone: only 26% of first-time buyers were one-person households. It also means you need to be a higher earner. People with mortgages are concentrated in the two fifths of people with the biggest incomes. It means people are making compromises with real consequences. They’re having to pay the mortgage for longer, so of those first-time buyers who had a mortgage, over half (55%) had a repayment period of 30 years. This is up from 45% five years ago.

“They’re also having to buy with a deposit that makes up a smaller percentage of the property value. Around two thirds of first-time buyers (60%) paid a deposit of less than 20%, and a fifth (20%) paid less than 10%. Unfortunately, borrowing more means facing higher mortgage payments, and at a time of higher rates this raises real risks for those who need to remortgage. Meanwhile, owning a smaller stake in the property means that if we face a period of falling prices, more new buyers may risk falling into negative equity.”