UK homes are at their most affordable relative to earnings in 11 years, but buyers are still facing higher monthly mortgage payments, new analysis shows.
The average home costs 7.3 times median earnings, down from 7.6 times a year ago and the lowest ratio since 2015, according to Lloyds data highlighted by Moving Compared.
Average property prices increased by just 0.5% to £299,131 between the second quarters of 2025 and 2026, while median earnings rose 4.5% to £40,790.
But the improvement in the house-price-to-income ratio has not translated into lower monthly borrowing costs.
MORTGAGE COSTS
Average monthly mortgage payments increased from £1,100 to £1,157 over the same period – an additional £684 a year.
Moving Compared points to higher mortgage rates as a key reason for the divergence, with the average two-year fixed rate standing at 5.93% on 1 October compared with 4.83% at the end of February.
The figures underline the distinction between property affordability, based on the relationship between prices and earnings, and mortgage affordability, which is also heavily influenced by borrowing costs.
FIRST-TIME BUYERS
The same divide is evident among first-time buyers.
An average first home now costs 5.9 times median earnings, down from 6.1 times last year.
However, average monthly mortgage repayments for first-time buyers have increased from £1,100 to £1,150, while buyers typically require around £24,000 for a 10% deposit.
Moving Compared says buyers should therefore consider monthly borrowing costs alongside headline house-price-to-income measures when assessing what they can afford.
