Mortgage blog: Nearly a third of Brits paying ‘unaffordable’ housing costs

Posted 22 November 2013

New research from the BBC's Panorama show has found that almost one in three Brits spend more than a third of their disposable income on mortgage or rent costs. 31% of respondents to the BBC survey said they were paying more than a third of their available cash on their home, with housing charity Shelter reporting that makes mortgage or rent costs "unaffordable".

The charity also says that family budgets are being put under "enormous pressure" because of a "shortage of affordable homes".

31% of people paying unaffordable mortgages or rent

The survey of 1,003 people for Panorama found that nearly a third are in a situation where they are paying too high a proportion of their income on housing costs. According to Shelter and the Joseph Rowntree Foundation, spending more than a third of your disposable income on rent or a mortgage means you may not be able to afford other basic needs.

Shelter chief executive Campbell Robb said: "The widely accepted test of affordability is that housing costs should take up no more than a third of your income. But in reality, many families don't have any option but to pay out much more. This sees some faced with impossible choices every day - including between putting enough food on the table or paying for the roof over their head."

Keith Osborne, editor of, says: "Millions of Brits are paying rent or a mortgage that leaves them with insufficient cash for other essentials. And, with the Bank of England suggesting that interest rates will rise sooner than expected, the situation could be set to get worse.

"Recent research from property analyst HML has suggested that if the base rate increased from its current level of 0.5% to 1.75%, around 30,000 people would fall into arrears within a year. So, if you're worried about the level of your mortgage payment, it's worth speaking to a mortgage broker and finding you whether you can take advantage of a fixed rate deal to protect yourself against future rate rises."

Help to Buy scheme is like ‘pouring petrol over the car and setting fire to it'

Panorama also looked at the Help to Buy scheme set up by the government in April to help homebuyers who could afford mortgage repayments but were struggling to raise a deposit. The scheme was extended in October to allow millions of buyers to take advantage of low-deposit mortgages.

However, not all experts believe the initiative is wise. Merryn Somerset Webb, editor-in-chief of MoneyWeek magazine, said Help to Buy risks inflating prices and overheating the housing market.

She said: "It's like pouring petrol over the car and setting fire to the whole thing. You know you might get a little heat in the short-term but the end result is not actually what you wanted."

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