The average mortgage-to-salary ratio across 80 UK towns & cities, uncovered

What is a mortgage-to-salary ratio?

The mortgage-to-salary ratio is a key metric used by lenders to determine how much they are willing to lend. It is calculated by dividing the mortgage amount by the borrower's annual salary. This ratio ensures that borrowers do not overextend themselves financially, making it easier to manage repayments and reducing risk for lenders. 

Typically, lenders use a benchmark of 4.5 times the borrower's salary, but this can vary based on individual circumstances and property location.

For example, if you have an annual salary of £30,000, some mortgage lenders might use the 4.5 times ratio as a guideline, potentially offering up to £135,000. 

However, it’s important to note that not all lenders strictly adhere to this 4.5 times benchmark. Depending on various factors such as loan amounts, credit scores, existing debts, your profession, and your overall financial situation, some lenders may offer more than 4.5 times your salary, while others may lend less. 

Key findings:

After calculating the average salary, house price and deposit size in the top 80 most populous towns and cities, we’ve uncovered the following statistics:

• A third of cities exceed the 4.5 times mortgage-to-salary ratio: 24 out of 80 cities (30%) exceed the 4.5 times mortgage-to-salary ratio for couples. This figure is a common benchmark used by lenders to determine how much they are willing to lend. 

• 96% of cities have too high of a house-price-to-income ratio for aspiring solo homeowners: 77 of the cities analysed surpass the 4.5 times ratio for single buyers on an average salary.

• Bath has the highest borrowing requirement: In Bath, a person buying a home alone would need to borrow 15.5 times their salary, while a couple would still face a hefty ratio of 7.7 times.

• Middlesbrough is the most affordable city for mortgage lending: At the other end of the scale, solo mortgage borrowers in Middlesbrough would only need to borrow 3.7 times their salary, and couples would require just 1.8 times.

• There’s a clear North-South divide: Our research has revealed that a clear North-South divide exists in housing affordability, highlighting the significant challenges faced by buyers in southern cities compared to their northern counterparts.

Important Note: The figures presented above are based on average salaries and house prices. Individual circumstances can vary significantly, and many homebuyers successfully secure mortgages through various means, including government schemes, larger deposits, or alternative lending options. These averages are intended to provide a general overview of the market, not to discourage potential buyers. Always consult with a mortgage professional to understand your personal borrowing capacity.

Uncovered: The top 10 most unaffordable towns & cities for homebuyers on an average wage

Below is a revealing list of UK towns and cities where the mortgage-to-salary ratio exceeds the standard 4.5 times benchmark based on the average annual salary and house price in each city.

Cities are ranked from highest to lowest ratio, highlighting areas where affordability is most challenging.

*Average deposit is based on 15% of the average house deposit 

Bath is home to the highest mortgage-to-salary ratio at 15 times for solo homebuyers

At the top of the list, we find towns and cities predominantly located in southern England, where the housing market is particularly competitive and prices are steep. For instance, Bath tops the chart, where a single buyer would need to borrow 15.54 times their salary based on averages. Even those in a couple would have to borrow an average of 7.77 times their salary.

Similarly, the City of London follows closely, with a ratio of 15.36 times the salary for aspiring solo homeowners, or 7.68 for those buying with someone.

While these figures may seem daunting, it's important to remember that they're based on averages, and many buyers find success through various means such as shared ownership, help-to-buy schemes, or focusing on more affordable areas within these cities.

Homebuyers in London commuter towns face higher-than-average ratios

London's house prices have also influenced nearby commuter towns. Homebuyers on an average salary in Woking would have to borrow 14.70 times as a solo buyer or 7.35 times as a couple, based on average property figures.

It's a similar story in Watford; here the average mortgage-to-salary ratio is 14.16 for a solo homebuyer and 7.08 for two people. These areas have become increasingly popular among buyers seeking proximity to London without the cost of living directly in the capital.

While this demand has led to rising house prices, many buyers still find opportunities in these areas, often by exploring different property types, buying at auction or considering up-and-coming neighbourhoods.

University towns may be unaffordable for homebuyers on an average wage

Notable university cities such as Cambridge and Oxford are also unaffordable for many homebuyers on an average salary. 

In Cambridge, single buyers are looking at borrowing a staggering 14.46 times their salary, while couples need to stretch to 7.23 times. Oxford isn't far behind, with solo buyers needing 13.85 times their salary and couples 6.92 times.

The high demand for housing in these cities is driven by a mix of students, academics, and professionals, all competing for limited property options. This influx creates a housing market where prices soar, often leaving average earners struggling to keep up.

Sea, sand and soaring prices: Coastal living comes at a premium 

Coastal cities like Brighton and Bournemouth offer stunning views and a desirable lifestyle, but they come with a hefty price tag. 

Our research shows that single buyers in Brighton need to borrow 13.72 times their salary, while couples face a ratio of 6.86 times. Meanwhile, Bournemouth presents a slightly more manageable, yet still challenging, 10.70 times for singles and 5.35 times for couples.

It appears that the appeal of seaside living drives up demand, pushing property prices higher and making it increasingly difficult for first-time buyers to enter the market.

Top 10 most affordable towns & cities for homebuyers on an average wage

Our research has also uncovered that there are some cities where the average salary aligns more closely with the average house prices. 

The following offer a more accessible path to homeownership and all fall under the 4.5 times mortgage-to-salary benchmark if you’re buying a house as a couple:

The North East is an affordability haven for homebuyers on an average wage

Our analysis has revealed a clear trend: Northern cities dominate the most affordable places for homebuyers in terms of their average mortgage-to-salary ratio.

Middlesbrough stands out as the most affordable city for homebuyers. With an average annual salary of £26,533 and an average house price of £115,690, homebuyers would need to borrow just 3.71 times their salary. For couples, this figure drops to an incredibly manageable 1.85 times.

Middlesbrough's affordability makes it an attractive option for those looking to get on the property ladder without overstretching their finances. Many buyers in this area benefit from lower property prices compared to the national average, making it easier to secure a mortgage and manage monthly repayments.

Not far behind, Hartlepool presents a house price-to-income ratio of 4.04 for solo homebuyers and 2.02 for couples. The average house price of £118,987 makes it another attractive option in the North East.

Darlington is also noteworthy, with a ratio of 4.87 for solo homebuyers and 2.44 for couples. This area offers a variety of housing options, from modern developments to more traditional homes, catering to diverse buyer preferences.

Overall, the North East presents a range of opportunities for homebuyers looking for affordability. While challenges exist in the housing market, particularly in more expensive regions, the North East stands out as a viable option for those seeking to enter the property market without excessive financial strain.

Seven strategies to improve your mortgage affordability 

If you're looking to become a homeowner, there are various strategies to consider beyond simply increasing your borrowing capacity. Options like buying at auction, choosing a more affordable property, or exploring different areas can often lead to finding a cheaper house. These approaches may help you secure a home without exceeding the common 4.5 mortgage-to-salary ratio.

However, if you do need to improve your mortgage affordability, here are seven strategies that can be implemented:

1. Improve your credit score

A strong credit score is important for lenders as they determine your mortgage affordability. To improve your credit score, pay your bills on time, reduce outstanding debts and check your credit score report for inaccuracies.

2. Save for a larger deposit 

Whilst the average house deposit is 15%, saving a higher percentage can significantly improve your mortgage-to-salary ratio. This is because a higher deposit reduces the amount you need to borrow, which increases your chances of securing a mortgage. It also means you’ll pay less interest overall. If you’re struggling to save each month, we have shared 12 tips for boosting your deposit by £7,000.

3. Consider a joint application or a joint borrower sole proprietor mortgage

If you’re able to purchase a property with another person, this naturally improves your chances of securing a higher mortgage total. As our research shows, it could be the difference between transforming your mortgage-to-salary ratio from 15 to 7. 

If this isn’t an option, another possible option could be a joint borrower sole proprietor mortgage (JBSP). This allows up to four people (such as parents, a sibling or friends) to use their joint income to buy a property that just one person will live in. 

Do, however, note that this is a joint liability which means that if one person can’t pay the monthly mortgage payment, everyone is liable to cover the payment between them or the property could be repossessed. 

4. Minimise your debt-to-income ratio

Mortgage lenders also analyse your debt-to-income ratio when assessing your mortgage application. By paying off your debts, such as credit cards and personal loans, you’ll improve your overall financial profile. This shows lenders that you have more disposable income and, therefore, can afford higher mortgage repayments.

5. Explore shared ownership options

Shared ownership schemes allow you to buy a share of a property (usually between 10% and 75%) while paying rent on the remaining share. Over time, you can purchase additional shares until you own the property outright.

This approach can make homeownership more accessible by reducing the initial financial burden and improving your mortgage-to-salary ratio, as you’ll be borrowing less relative to your salary. 

Shared ownership is particularly advantageous in high-price areas, such as those listed higher up, enabling buyers to enter the property market who might otherwise be priced out. 

6. Demonstrate stable income

If you’re self-employed and are looking for a mortgage, make sure you have at least two years of consistent income documentation. For salaried employees, ensure that you have payslips from the last 3-6 months. 

7. Speak to a free mortgage broker 

Whilst 4.5 times is the most common mortgage-to-salary ratio, different lenders have varying criteria and may accept a higher figure than this depending on specific circumstances, such as your profession or credit history. Speak to a free mortgage broker who can help you navigate all of your options and find you a lender that may be more flexible. We can do this for free - all you need to do is fill in your details. You’ll then have the option to book a call with one of our 60+ mortgage advisors.

Do, however, note that stretching your finances too thin can lead to significant risks. It's crucial to carefully consider your long-term financial stability and ability to meet higher repayments before pursuing a larger mortgage. 

Ultimately, your goal should be to find a balance between achieving your homeownership dreams and maintaining a sustainable financial future.

Uncovered: The mortgage-to-salary ratio of UK towns & cities

Below is a comprehensive list of the mortgage-to-salary ratio in the top 80 most populous towns & cities:

Methodology

To calculate the mortgage-to-salary ratios for UK cities, we utilised data from reliable sources:

• House Prices: Average house prices were sourced from Zoopla (e.g., https://www.zoopla.co.uk/house-prices/chelmsford/).

• Average Salaries: Average salaries were obtained from the Office for National Statistics (ONS).

Mortgage Calculations:

• We assumed a 15% deposit on the average house price, resulting in an 85% mortgage total.

• For single buyers, the total mortgage was divided by the average salary for one person.

• For couples, the mortgage total amount was divided by the combined average salary for two people.

Considerations:

It is important to note that not all lenders use the same method for calculating mortgage affordability for couples. Some mortgage lenders may apply the highest earner’s salary multiplied by the common 4.5 times benchmark and then add the lowest earner’s salary, while others may use the combined income but apply a lower multiple (e.g. 4 times).