Home owners in the UK have reached mortgage freedom day, the date when new borrowers have earned enough money to cover their payments for the rest of the year overall, new research shows.
The data, collected annually by lender the Halifax, is based on the current average annual mortgage repayment cost of £8,729 and the average net annual income of £28,752.
Mortgage Freedom day also fell on the 16 April in 2018 suggesting little change in affordability for home owners across the year. Indeed, since 2014, the date has moved back by just six days as wage growth and house prices remained relatively stable across the period.
But the date varies according to location. For example, it was in February for people with mortgages in Copeland in the North West of England while in the London borough of Brent the day will not come until September.
‘If every penny earned this year went towards their mortgage today would be the day that the average UK borrower could celebrate paying off their mortgage for the year,’ said Andy Bickers, mortgages director at the Halifax.
‘While on its own the significance of this date is hard to comprehend, comparing Mortgage Freedom days year to year allows for quick comparisons on affordability. Specifically, how much people are earning against how much they are spending on their mortgage,’ he explained.
‘Therefore, with both house prices and UK average earnings continuing to rise, it makes sense that Mortgage Freedom day this year remains unchanged from 2018,’ he added.
The data shows a definite North/South divide. While all home owners in the North reached their Mortgage Freedom day in March, those in the Midlands and East Anglia will have to wait until the end of the month, and for Southerners it will not be until May at the earliest.
Indeed, while the North of England and Scotland have seen their Mortgage Freedom days move earlier in the year over the past five years, the rest of the UK have slowly seen theirs push further out.
In Copeland it took just 49 days for local residents to reach the milestone and four of the top five earliest Mortgage Freedom days fell in the North West. For Barrow-in-Furness and Burnley it was 27 February alongside West Dunbartonshire in Scotland and in Hyndburn it was 28 February.
Owners in London and the South East have the longest to wait. Brent home owners were last to reach the milestone on 11 August last year and it will be the same again in 2019, having to wait until around 05 September while from Haringey it is 24 August, and Hackney 12 August.
Rental Freedom day will be 26 April. Tenants in Northern Ireland were the first to achieve rental freedom this year on 24 March, followed by the North of England on 01 April and Yorkshire and Humber on 05 April.
Tenants in London have to wait nearly four months longer than those in Northern Ireland, not achieving rental freedom until 30 July, 12 days later than last year, and 40 days after London’s average Mortgage Freedom day.