The Money Statistics is a monthly report chock-full of financial facts and figures relating to many areas of life in the UK. Among these figures are several notable areas relating to mortgages and home ownership. For example, the average outstanding mortgage in the UK in August was estimated to be £121,678.
While this is only an average, it represents the first time the figure has exceeded £120,000. It also shows a notable increase since 2013. Back then, the average outstanding mortgage stood at £109,487. This means the average has increased by over £12,000 in just four years.
Several factors are driving the rise
“We’ve seen how longer mortgage terms have become the new normal in recent years,” said Darren Pescod, CEO of The Mortgage Broker Limited. “The days when a 25-year mortgage term was the traditional mortgage length seem to be fast disappearing.
“Back in 2005, it was very unusual to arrange a mortgage over a 35-year term. They accounted for just 2.7% of all mortgages back then. Today, just 12 years later, that percentage has jumped to 15% of all mortgages. I see no reason why this trend won’t continue. For some, it can be the only way to afford a property and to get onto the housing ladder.”
Rising house prices
The Money Statistics also reveal there has been a rise of 2% in house prices in the 12 months leading to September 2017. This statistic comes from Nationwide, one of the leading lenders in the UK. The rise in house prices will also contribute to a higher overall figure for outstanding mortgages.
Mortgages in arrears are down
There is good news regarding mortgage arrears, however. The report indicated there are now 13 fewer mortgages per day highlighted as having arrears of 25% or more of the remaining mortgage balance.
Meanwhile, 56 claims for mortgage possession are made each day, along with 36 daily mortgage possession orders.
Perhaps the most concerning figure of all is not directly related to mortgages
The statistics also revealed that 35% of households in the UK had no savings to fall back on at all. This makes sobering reading, especially since there is a real chance the Bank of England could raise interest rates as early as November this year.
With no cushion to fall back on, and personal debt on the rise as well (also evidenced in the report), the coming months could be a concerning time for many. We have already seen rises for fixed-rate mortgage products, and there is a real chance more rises could be on the way.
“We often hear how hard it is for people to successfully apply for a mortgage,” Darren Pescod added. “However, I think these figures show we could be heading into a worrying time for those who already have mortgages and are facing the possibility of a rate rise. If they have little in the way of savings, they could be facing some troubling times ahead.”