Mortgage affordability improves to three-year high

Mortgage finance is at its most affordable in nearly three years, according to new analysis by mortgage and protection network Stonebridge.

The network’s research shows the average borrower’s mortgage accounted for 34.3% of their salary in September – the lowest proportion since November 2022. This is down from 34.6% in August and 40% a year earlier.

Falling mortgage rates, which are down 57 basis points to an average of 4.19% over the past 12 months, are the main driver behind the improvement in affordability.

However, rising wages, which rose 4.75% in the year to September, have also made mortgage finance more affordable to the average borrower over the past year.

Rob Clifford, chief executive at Stonebridge, commented: “Mortgage affordability has improved significantly over the past year, reaching its most favourable level since late 2022. Falling mortgage rates, alongside rising wages, mean borrowers are spending a smaller share of their income on housing — a welcome relief for first-time buyers and those looking to move. Looking ahead, the Bank of England is expected to cut rates in December.

“While fixed rate mortgages are priced off swaps rather than the base rate, a lower-rate environment could encourage lenders to bring more competitive deals to market. This suggests affordability could continue to improve into 2026, provided house prices don’t rise unexpectedly.”