Mortgage payments have become the toughest financial strain for UK households since the 2008 financial crisis, according to analysis from INTEREST by Moneyfacts.
Research found that average earners buying a home over the past few years would have seen monthly repayments take up nearly half of their gross salary.
Back in 2000, the average house price was £78,000, around five times the average wage of £15,800.
By 2025, the average house price had risen to £269,000, nearly seven times the average wage of £37,600, going well above most lending caps.
Since 2000, wages went up 237% but house prices jumped by 345%.
If pay had kept up with house prices since 2000, the average UK salary would be over £54,000 in 2025.
Additionally, the research found that house price inflation outpaced most household goods.
A loaf of bread would cost £2.28 if it had followed house price rises, and a dozen eggs would be £4.73.
Borrowers could save around £100 a month by picking one of the lowest two-year fixed mortgage rates at 90% loan-to-value (LTV), which was 4.20% compared to the average 5.12% in June.
But this would still take up about 38% of gross monthly income, a similar level to 2018.
Adam French, head of news at Moneyfacts, said: “Affordability may have eased a touch over the past 12 months, but buying a home in 2025 is still too much of a financial stretch for many.
“Putting aside the not inconsiderable tasks of affording rapidly rising rent costs and saving a sizeable deposit, monthly mortgage repayments are eating up almost half of gross earnings – the toughest burden since the 2008 financial crisis.
“Years of ultra-low borrowing costs, Government incentives and a lack of housing supply have driven house prices far ahead of wages, leaving many buyers caught between high prices, expensive borrowing and strict lending rules.”
French added: “It all means that a typical borrower today will need to take a mortgage over a 50-year term to keep their repayments to a more affordable 35% of gross monthly income.
“There remains an acute risk that the market could overcorrect or overheat depending on the future path of interest rates, inflation and wage growth despite a recent softening of house price growth.
“We now need a period of stability where modest house price growth allows incomes to catch up so the market can return to more sustainable levels that benefit homeowners, homebuyers and the wider economy.”
He said: “In the meantime, it may mean holding rates where they are until inflation is in check is what is needed to nip another boom-and-bust cycle in the bud.”
The data showed that in June 2024, the average gross monthly earnings were £2,993, with an average house price of £259,605.
The average mortgage rate was 5.76%, leading to a monthly repayment of £1,470 – just over 49% of gross salary.
By June 2025, repayments dropped to £1,416 but still made up 45% of wages.
Mary-Lou Press, president of NAEA Propertymark, said: “While a reduction in interest rates will have helped many with mortgage costs and made the prospect of borrowing money to step onto or move up the housing ladder easier, it is clear that wage growth is not keeping pace with house price growth.
“Homeowners are witnessing a squeeze on their finances, and for many aspiring first-time buyers, they now need to save up what can be an unrealistic large lump sum to purchase their first home.
“With speculation circulating regarding potential changes to Stamp Duty in England and Northern Ireland, we need the UK Government to focus on reviewing current rates and bands rather than targeting higher-value properties, as historically, reducing or removing property taxes has led to increased transactions, which in turn stimulates spending and drives broader economic growth.”
Press added: “Alongside this, all governments throughout the UK need to meet their individual housing targets to increase the supply of homes and bring down property prices in the longer term.”
