Research by Halifax shows 19 April is this year’s UK Mortgage Freedom Day, the day when new borrowers will have earned enough to pay off the annual cost of their mortgage.
It comes just over two weeks before Rental Freedom Day, when the average renter will have earned enough to pay off their annual rent.
Mortgage Freedom Day this year occurs just a day later than in 2015 and is the result of average annual mortgage repayment rising by £17 during the year. Rental Freedom Day comes 16 days later on the 5th May, again a day later than in 2015.
The calculations are based on the average annual mortgage repayment cost of £7,584 and the average net annual income of £26,023.
Londoners have the longest wait
There is a wide variation in Mortgage Freedom Day across the country, with home owners in Scotland and Northern Ireland achieving this on 12 March, followed by Yorkshire and the Humber (25 March), the North West (26 March) and the North (27 March).
Mortgage Freedom Day for Londoners doesn’t arrive until 26 June – three months later than in northern England.
Regionally, the North was the first to achieve Rental Freedom Day (5 April) this year, just ahead of Yorkshire and the Humber (9 April) and the East Midlands (13 April). Tenants in London have to wait until 13 July.
Craig McKinlay, mortgage director at Halifax, said: “For most homeowners, mortgage payments are the biggest outgoing every month; knowing they’ve earned enough to pay off their mortgage for another year should be a reassuring thought. On the other hand, those who rent will need to work a further couple of weeks to have earned enough to cover their annual rental cost.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “In theory, Mortgage Freedom Day is the day that borrowers have earned enough to pay their mortgage for the rest of the year, but the truth is that very few people will be in this position, since mortgage repayments are normally just one of many monthly expenses.
“Nonetheless, Mortgage Freedom Day provides a good opportunity to think about how much of your monthly income is going towards your mortgage. At the moment, borrowers are enjoying historically low interest rates, but it’s important to remember that mortgage rates are not directly linked to the base rate, which means that circumstances could change at short notice. Anyone who is thinking about remortgaging should therefore speak to a broker as soon as possible, as the deals currently on offer will not last forever.”
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