Mortgage affordability in the UK reached its most favourable level in March since the end of last year, according to new figures from the national mortgage and protection network, Stonebridge.
The company’s latest bi-monthly Mortgage Affordability Index, which combines official statistics and in-house data, shows that mortgage repayments accounted for 36.9% of the average borrower’s salary in March. This marks a modest decline from 37% in both January and February and is the lowest reading since December, when repayments stood at 36.5%.
The recent improvement was attributed to a combination of rising wages and a slight easing in mortgage rates. Average earnings in March increased by 0.5% on the previous month, according to data from the Office for National Statistics. At the same time, the average mortgage rate edged down from 4.53% to 4.5%, returning to levels last seen in November 2024, as reported by the Bank of England.
Stonebridge’s data also revealed that the average loan amount taken out in March rose to £194,372 — a 0.8% increase on February and the highest figure recorded since October. Despite this uptick in borrowing, affordability improved, underlining the impact of improved earnings and lower interest rates.
Rob Clifford (pictured), chief executive at Stonebridge, said: “Mortgage affordability improved slightly in March, but after a turbulent three years, even such modest progress matters. Our affordability index shows that stability is returning to the market, and with it, an appropriate sense of confidence. That shift in sentiment is just as important as the headline numbers.”
Clifford highlighted recent moves by the Bank of England and lenders that could help to maintain this positive trajectory. “The good news is that the outlook for borrowers looks increasingly positive. The Bank of England’s recent rate cut — and that further cuts are very likely — has given lenders the confidence to reduce pricing even further. Several high street banks have launched sub-4% mortgage deals, and competition is increasing across the market and delivering consumer benefits,” he added.
“While we’re still some way from a fully-fledged recovery in market activity, momentum is clearly building. For brokers, any positive pricing and market news is always an opportunity to engage with existing customers and continue to strengthen that relationship – and deliver even better consumer outcomes.”
Stonebridge’s index shows mortgage repayments as a proportion of salary have been trending downwards since peaking at 40.5% in August 2024. The long-term average stands at 35.9%, indicating that affordability remains just above historical norms but is heading in a more favourable direction.
