Mortgage income multiples: The locations where FTBs have to borrow more than 7 times their salary
New research by online mortgage broker Mojo Mortgages on mortgage income multiples, shows the locations where FTBs have to borrow more than 7 times their salary.
With house prices rising at their fastest pace in 17 years, first-time buyers now need to borrow up to seven-and-a-half times their salary to get on the property ladder in some popular UK cities, according to new figures.
Bath tops the list as the country’s least affordable location according to the new research of 100 UK towns and cities, followed by Oxford and London.
Homes in Bath typically command a price tag of more than £528,530, almost twice the national average of the locations featured in this research of £287,830.
But with residents typically earning £29,940 a year – a couple who’d saved a 15 per cent deposit would still have to borrow seven-and-a-half times their salary for an average-priced home in the city.
While wages are higher in Oxford, a couple would need to borrow 7.29 times their combined salary for a £570,357 property, and in London it would be an income multiple of 7.13 for a £704,138 home.
The top 20 most expensive towns and cities are all in or around the South of England, apart from Stratford-upon-Avon in 18th:
| Location | Average annual salary (£) | Total salary of couple both earning average salary (£) | Average House price (£) | Average deposit in (£) (based on 15%) | Remaining mortgage balance (£) | Average income multiples required |
| Bath | £29,940.00 | £59,880.00 | £528,530.00 | £79,279.50 | £449,250.50 | 7.50 |
| Oxford | £33,263.00 | £66,526.00 | £570,357.00 | £85,553.55 | £484,803.45 | 7.29 |
| London | £42,001.00 | £84,002.00 | £704,138.00 | £105,620.70 | £598,517.30 | 7.13 |
| Poole | £28,753.00 | £57,506.00 | £454,658.00 | £68,198.70 | £386,459.30 | 6.72 |
| Brighton | £30,946.00 | £61,892.00 | £462,035.00 | £69,305.25 | £392,729.75 | 6.35 |
| Guildford | £41,369.00 | £82,738.00 | £613,099.00 | £91,964.85 | £521,134.15 | 6.30 |
| Watford | £32,965.00 | £65,930.00 | £456,029.00 | £68,404.35 | £387,624.65 | 5.88 |
| Slough | £33,198.00 | £66,396.00 | £457,549.00 | £68,632.35 | £388,916.65 | 5.86 |
| Exeter | £26,710.00 | £53,420.00 | £333,933.00 | £50,089.95 | £283,843.05 | 5.31 |
| Cambridge | £39,112.00 | £78,224.00 | £480,366.00 | £72,054.90 | £408,311.10 | 5.22 |
| Bournemouth | £28,753.00 | £57,506.00 | £350,230.00 | £52,534.50 | £297,695.50 | 5.18 |
| St Albans | £50,356.00 | £100,712.00 | £611,025.00 | £91,653.75 | £519,371.25 | 5.16 |
| Canterbury | £30,867.00 | £61,734.00 | £368,661.00 | £55,299.15 | £313,361.85 | 5.08 |
| Reading | £37,324.00 | £74,648.00 | £445,438.00 | £66,815.70 | £378,622.30 | 5.07 |
| Bristol | £30,579.00 | £61,158.00 | £362,563.00 | £54,384.45 | £308,178.55 | 5.04 |
| Stevenage | £29,209.00 | £58,418.00 | £345,766.00 | £51,864.90 | £293,901.10 | 5.03 |
| Eastbourne | £27,869.00 | £55,738.00 | £328,212.00 | £49,231.80 | £278,980.20 | 5.01 |
| Stratford-upon-Avon | £35,311.00 | £70,622.00 | £415,390.00 | £62,308.50 | £353,081.50 | 5.00 |
| Cheltenham | £34,896.00 | £69,792.00 | £409,614.00 | £61,442.10 | £348,171.90 | 4.99 |
| Maidstone | £32,249.00 | £64,498.00 | £377,294.00 | £56,594.10 | £320,699.90 | 4.97 |
At the other end of the spectrum, some of the best bargains to be found are in the North of England and Scotland, with the top ten most affordable areas as follows:
| Location | LocationAverage annual salary (£) | Total salary of couple both earning average salary (£) | Average House price (£) | Average deposit in (£) (based on 15%) | Remaining mortgage balance (£) | Average income multiples required |
| Hull | £29,193.00 | £58,386.00 | £158,228.00 | £23,734.20 | £134,493.80 | 2.30 |
| Bradford | £27,413.00 | £54,826.00 | £151,858.00 | £22,778.70 | £129,079.30 | 2.35 |
| Gateshead | £27,309.00 | £54,618.00 | £153,159.00 | £22,973.85 | £130,185.15 | 2.38 |
| Hartlepool | £25,530.00 | £51,060.00 | £147,916.00 | £22,187.40 | £125,728.60 | 2.46 |
| Barnsley | £27,411.00 | £54,822.00 | £167,335.00 | £25,100.25 | £142,234.75 | 2.59 |
| Blackpool | £22,567.00 | £45,134.00 | £139,752.00 | £20,962.80 | £118,789.20 | 2.63 |
| Darlington | £27,843.00 | £55,686.00 | £172,765.00 | £25,914.75 | £146,850.25 | 2.64 |
| Durham | £27,859.00 | £55,718.00 | £176,834.00 | £26,525.10 | £150,308.90 | 2.70 |
| Wigan | £28,970.00 | £57,940.00 | £184,541.00 | £27,681.15 | £156,859.85 | 2.71 |
| Doncaster | £27,661.00 | £55,322.00 | £187,706.00 | £28,155.90 | £159,550.10 | 2.88 |
| Glasgow | £29,557.00 | £59,114.00 | £200,957.00 | £30,143.55 | £170,813.45 | 2.89 |
Richard Hayes, CEO and co-founder at mortgage broker Mojo Mortgages, said it’s further evidence that first-time buyers are being squeezed out of the cities where they grew up or work.
Richard added:
“First-time buyers could now borrow as much as seven times their salary – but this would be a big stretch for many couples and wouldn’t allow them to buy a property in some of the UK’s most expensive locations.
“Lack of affordable housing has repercussions, not only for the individuals involved but the wider economy and community if workers in lower-paid jobs are priced out of the market.
“Enabling people to borrow more might help them onto the property ladder but much will depend on their circumstances as lenders and brokers must apply strict affordability checks. It’s also important that buyers weigh up whether the location offers the best quality of life for them.”
Mojo Mortgages compared average earnings with house prices and found that 30 towns and cities in the UK were above the traditional 4.5 salary multiplier applied to borrowers.
But it found that buyers could still enjoy the buzz of a big city, without paying a premium, in Manchester and Birmingham where wages are above average and housing more affordable.
A couple buying a £235,650 home in Manchester would only need to borrow 3.77 times their salary, while in Birmingham it’d be 3.56 times for a £235,681 property.
Edinburgh and Glasgow are relatively affordable too, as are cities such as Liverpool, Newcastle and Leeds – but bargain hunters could also snap up a property in Hull borrowing just 2.30 times their salary, Bradford at 2.35 times or Gateshead at 2.38.
For the full research, please visit here.
Kindly shared by Mojo Mortgages
Main photo courtesy of Pixabay
