Average mortgage debt for UK householders climbs to £85k

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The typical mortgage debt of British homeowners has climbed to the £85,000 mark, representing a near-2.5% rise on the £83,000 average of 2014, according to the Bank of England in its latest Quarterly Review.

In the Bank’s findings, it was found that higher mortgage debt levels were becoming more burdensome for those paying off mortgages in an environment made more difficult by ongoing austerity measures from the government, which have had a clear impact on around one-third of households across the UK.

Renters were also earmarked as those affected the most by financial struggles in 2015; it was found that people were becoming more concerned about meeting accommodation costs, even though the average price of renting had dropped from its high in 2013. Over one-quarter of respondents to the Bank’s survey said rent was a “heavy burden”, though this represented a drop from 36% two years previously.

Speaking to the Guardian about mortgage debt UK, chief economist at the Resolution Foundation Matt Whittaker said that he was happy to see that living standards “enjoyed a long overdue rebound” during 2015, but the financial situation for British households continued to raise questions, especially those renting and number of mortgage holders who struggle to meet monthly payments.

He added: “With inflation set to pick up relatively rapidly in the coming months and interest rates expected to rise at some point in 2016, there’s a risk that the pace of the living standards ‘rebound’ will slow. Importantly, as the Bank acknowledges, the outlook for household finances will rest not just on the pace of income recovery, but its distribution too.”

Nonetheless, it may be a better time than ever for people to get on the property ladder. According to the latest findings from the Genworth / Moneyfacts Mortgage LTV Tracker, the number of 95% loan-to-value mortgage products has jumped from 141 in November 2014 to 260 just 12 months later – and six times as many compared to September 2013 (43).

The authors of the report still recommended a cautious approach from buyers, however, adding that the market may be “a long way short of full health”, with the danger that the government’s Help to Buy scheme has a major part in this upswing.