Latest figures on mortgage lending from the Council of Mortgage Lenders show that buyers of homes are continuing to borrow more relative to their income. We expect mortgage regulation to limit this in the future, but to understand what this means for different parts of the housing market it is important to understand levels of equity relative to debt.
We know from our analysis of the total value of homes in the UK that levels of equity have risen significantly more than levels of borrowing over the past five years. Total privately held housing equity now stands at £5.1 trillion.
In five years this equity has risen by £1.65 trillion, while mortgage borrowing has only increased by £106 billion. But the benefits of rising equity gains have been unevenly spread. Almost six out of 10 homes (57 per cent) are now mortgage free, meaning that mortgage borrowing is spread across just 43 per cent of all privately owned homes.
Across England and Wales borrowing totals around £1.2 trillion, which equates to an average of around £132,000 per mortgaged household. That figure has risen by £18,500 over the past five years as existing debt has been concentrated among a smaller number of home owners.
While at a regional level there is relatively little variation in the percentage of homes with an outstanding mortgage, average levels of outstanding debt vary enormously from region to region, as the below table shows.