That is according to Halifax which looked at the current average annual mortgage repayment cost, combined with the average net annual income, to identify what it has dubbed ‘Mortgage Freedom Day’.
According to the lender’s calculations the current average mortgage repayment is £8,729 and the average income across the UK is £28,752, meaning 16 April is this year’s Mortgage Freedom Day.
Last year the day fell on the same date meaning there has been little change in affordability for home owners across the year. Since 2014 the date has moved back by only six days because wage growth and house prices have remained stable across the period.
Andy Bickers, mortgages director at Halifax, explained: “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.
“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.
How location impacts mortgage freedom
There were, however, big differences in people’s Mortgage Freedom Days when regions of the UK were analysed separately.
Indeed, homeowners in Copeland in the North West, were the first to reach the milestone, celebrating their Mortgage Freedom Day in February. Meanwhile the residents of Brent in London were the last and must wait until September before they achieve mortgage freedom for the year.
Halifax also noted a distinct North-South divide with all homeowners in the North reaching their freedom days by March compared to southerners who must wait until May.
The study found, while the North and Scotland had seen their ‘Mortgage Freedom’ days move earlier in the year over the past five years, people in the rest of the UK have slowly seen theirs pushed further out.
Bickers added: “As reported last year, the North-South divide remains. The difference between the earliest and the latest ‘Mortgage Freedom’ day is over seven months.”
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Halifax said you can work out your own Mortgage Freedom Day by using the following calculation:
[Monthly mortgage payment] / [take home pay] * 365 = X
X will give you the number of days into the year you will reach your ‘Mortgage Freedom’ day.
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