The date may have gone unremarked in many people's calendars, but May 8th was Mortgage Freedom Day. This means it’s the day when the average UK couple who put everything they have earned since the start of the year towards their annual mortgage bill to become mortgage-free for the remainder of the year.
In October 2022, when mortgage interest rates spiked in the aftermath of the then-chancellor Kwasi Kwarteng’s infamous mini-Budget, Mortgage Freedom Day fell on 28th June – meaning that homeowners would effectively be looking at spending half their year’s earnings after income tax and National Insurance contributions on servicing their home loan. Or, put another way, in that month, loan rates were so high that it took the typical new borrower 180 days to earn enough to meet their annual mortgage repayment.
In May 2024, a couple with both partners working full-time who purchase the typical home with a 40% deposit and take out the average two-year fixed mortgage would spend 129 days paying off their mortgage if they put all their post-tax salary towards the repayments (this assumes they earn the same net salary). While this is 51 days earlier than the peak seen in October 2022, mortgage rates are still high and buyers are typically spending an extra three weeks repaying their mortgage than the 2013-21 average.
As always, the UK average masks regional variations. Mortgage Freedom Day has been and gone for homeowners in northern England, where property prices are lower. First to celebrate, on 6th April, were new borrowers in the North East – although this date is noticeably later than in 2020, when it fell on 23rd March. Mortgage Freedom Day has also already passed for buyers in Wales and the Midlands, while those in the East of England waited until the 21st of May.
Buyers in the South of England have longer to wait to become mortgage-free. For those in the South East, Mortgage Freedom Day fell on 1st June, and in London, it was due on the 4th of June. Homeowners in the South West needed to be the most patient – they weren’t able to celebrate effectively paying off their home loan until the 11th of June.
The South West overtook London to become the region where it took the longest period of time each year to reach Mortgage Freedom Day back in 2022. This is largely because, even though property prices are highest in London, earnings have increased faster than house prices in the capital, improving buyers’ affordability.
By contrast, in recent years house price rises in the South West have outpaced wage growth – in large part because this region became one of the most sought-after locations during the pandemic “race for space”.
