UK Mortgage Affordability at its Toughest since 2008: What it Means for Borrowers

As of May 2026, mortgage affordability in the UK is at its toughest since 2008, according to UK Finance. This is particularly evident in East Anglia, where borrowers in North Norfolk are spending 25.7% of their income on bills. The London commuter belt makes up the rest of the top 10 least affordable areas, with Londoners having the highest average mortgage debt of £280,000.

Impact on First-Time Buyers, Remortgagers, and Landlords

First-Time Buyers

For first-time buyers, the affordability squeeze can be daunting. For example, a first-time buyer in London with a £280,000 mortgage at a 90% loan-to-value (LTV) ratio, given the current mortgage rates, will have a monthly repayment of approximately £1,340. This represents a significant portion of their income, especially in comparison to a borrower in Northern Ireland, where the average mortgage debt is significantly lower at £99,500.

Remortgagers

For remortgagers, the impact is also significant. A remortgager in Hillingdon, Greater London, with a £250,000 mortgage at a 75% LTV, will see their monthly payments rise from £1,432 to £1,489 — an increase of £57 per month or £684 per year. This increase in monthly payments can place a significant strain on household budgets. In contrast, a remortgager in Northern Ireland with a £99,500 mortgage at a 75% LTV will see their monthly payments rise from £476 to £502, an increase of £26 per month or £312 per year.

Landlords

Landlords are also affected by these changes. A landlord in Scotland with a £200,000 interest-only BTL mortgage can expect a yield of 9%, translating to an annual income of £18,000. However, landlords in South Hams, Devon, will see the lowest yields at 5%, followed by Kensington and Chelsea at 5.1%. This means that a landlord in South Hams with a £200,000 interest-only BTL mortgage can expect a yield of 5%, translating to an annual income of £10,000.

Market Context

These affordability pressures are a stark contrast to the situation 12 months ago, when the UK base rate was at 3.25%. The increase to the current rate of 3.75% has contributed to the rise in mortgage repayments. Additionally, all regions of the UK saw an increase in buy to let (BTL) in 2025, with the highest BTL yields of more than 9% found in Scotland. The total number of purchase mortgages advanced in 2025 was 723,000, up 17% year-on-year. London and Northern Ireland had the highest percentage of borrowers on variable rate mortgages, at 16% and 18% respectively.

What This Means for Landlords in 2026

For landlords, the increase in BTL yields in Scotland is a positive development. However, the lower yields in South Hams, Devon, and Kensington and Chelsea may make these areas less attractive for investment. Furthermore, the increase in the number of borrowers on variable rate mortgages in London and Northern Ireland could lead to increased financial risk for landlords in these areas.

Frequently Asked Questions

What is the average mortgage debt in London?

The average mortgage debt in London is £280,000, the highest in the UK.

Where are the most affordable areas in the UK?

Seven out of 10 of the most affordable areas are in Scotland, with borrowers in East Ayrshire and Inverclyde spending only 17% of their income on mortgage repayments.

What is the current UK base rate?

The current Bank of England base rate is 3.75% as of April 2026.

Where are the highest buy to let yields?

The highest buy to let yields are in Scotland, with yields of more than 9%.