Many Britons struggle to buy a home as median price hits a record high of £278,000

Typical house prices in the UK are now 8.8 times higher than standard full-time wages, meaning tough regulations from mortgage lenders prevent more and more people from escalating.

People look at house prices displayed in the window of a real estate agent in Lewes, East Sussex
Home prices are growing at their fastest rate since 2007

UK average house price has skyrocketed to £278,123, according to Mortgage Halifax lenders – 8.8 times the typical UK salary.

Home prices rose 10.8% in the year to February 2022, according to Halifax’s latest home price index.

That was the fastest rate of increase since June 2007, and means home prices are at an all-time high.

UK average wage is £31,285, which means the typical house price is 8.8 times this.

That’s a problem as most mortgage lenders will only lend three to five times the average salary, due to Bank of England regulations in 2014.

Most lenders pay 4.5 times your salary, although they are allowed more than this for 15% of the first-time buyers they deal with.

However, the high salary cap combined with high house prices makes it virtually impossible for most individuals to afford the median home, and remains difficult for couples.

Halifax said that the main reason for the increase in house prices is that there are not enough properties to sell.

This limited demand is pushing house prices up into the market.

Halifax CEO Russell Galley said: “Lack of supply continues to underpin rising home prices, with recent industry surveys showing a dearth of newly listed properties, now trending. long-term direction.

“Over the past year, the average price of detached property (£43,251, +11%) has grown at more than four times the rate of flats (£10,462, +7%) in cash terms. “

More Britons will be able to buy homes under the Bank of England’s plan to remove tough regulations barring lower earners from accessing the property ladder.

However, the Bank plans to uphold the above rule that most borrowers cannot mortgage in amounts greater than 4.5 times their annual income.

The rule that could be relaxed is that anyone applying for a home mortgage must be able to pay a certain amount if interest rates rise.

Borrowers must be able to afford a 3% mortgage interest rate plus the lender’s ‘standard rate of change’ (SVR) – typically in the region of 4-6%.

So, for example, anyone taking out a mortgage at Halifax, one of the largest lenders, must be able to pay off their mortgage 6.99% a month – 3% plus the lender’s SVR is 3.99%.

The Bank of England says around 6% of people, 30,000 people a year, have been forced to spend smaller homeless people due to this strict rule.

More than 6% of Britons have been unable to get mortgages.

This rule was put in place to protect buyers from losing their home and going into debt if mortgage rates went up, but since 2014 the opposite has happened and housing rates are quite low.

As a result, borrowers are required to demonstrate that they can afford mortgage interest rates ranging from 6-9% when their actual mortgage rate can be as low as 1-2%.

The Bank is currently consulting on the complete removal of this regulation.

There are concerns that this could drive up house prices.

But Nick Mendes, director of mortgage engineering at brokerage John Charcol, said if this were to happen it would be short-lived.

“Is it going to affect borrowing, as you’ll be able to borrow a little bit more,” he said. But in the longer term everyone will be in the same position.

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Fry Electronics Team

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