14% of homeowners have outstanding mortgage debt over 4x yearly earnings

The proportion of homeowners with over £300,000 left to pay on their mortgage has nearly doubled in the past seven years, rising from 5% to 9% between 2017 and 2024, according to analysis of the FCA’s Financial Lives Survey by Broadstone. 

This is particularly marked in areas where house prices are higher, such as London, where that proportion has risen from 17% to 28% over the same seven-year period.

The FCA’s data also showed that one in seven (14%) homeowners had outstanding mortgage debt worth at least four times their annual income. This figure had risen from 11% seven years ago, albeit seeing a slight decline from 16% in 2020 and 2022.

There is also a worrying lack of rate comparison: over a fifth (22%) who could have changed their mortgage rate in the last three years (for example, remortgaging, porting, or buying) said they did not compare mortgages from two or more lenders.

Paul Matthews, senior director of risk at Broadstone, said: “It is clear that many more homeowners are taking on significant levels of mortgage debt yet household incomes have not kept pace with the continued rises in house prices. Given lenders typically cap the maximum amount homeowners can borrow at 4.5x annual household income it is interesting to see that one in seven said their outstanding mortgage debt was over 4x yearly earnings.

“Moreover, the statistically significant increase in homeowners with over £300,000 in mortgage debt demonstrates the concern over the impact of rising rates in the past few years – especially for homeowners in London who typically hold bigger mortgages.”