10th April 2014
Halifax has declared the 10th April the UK Mortgage Freedom Day. The lender’s calculations suggest that on the 100th day of the year new UK homeowners will have finally earned enough to pay off the annual cost of their mortgage. The equivalent date for renters arrives 32 days later, on the 12th May.
Though the date varies substantially across the country, based on the average annual mortgage repayment cost of £6,954 and the net annual income of £25,6034, Halifax has calculated that those with a mortgage will have today earned enough on average to cover their mortgage payments for the rest of 2014.
Mortgage Freedom Day this year occurs three days earlier than in 2013 (13th April) and almost a month earlier than five years ago (8th May 2009). The earlier date is due to net annual income increasing by £2,153 since last year, while the average annual mortgage repayment has increased by £357 over the same period.
Craig McKinlay, Mortgage Director, Halifax, says: “While monthly mortgage and rental costs account for the majority of many people’s household budgets, Mortgage Freedom Day provides a different perspective on how much we spend on these costs over the course of a year.
“Our research shows that today, if people had put everything they’d earned since the start of the year towards their mortgage, the average homeowner would be mortgage free for the remainder of the year, which is a reassuring thought.”
Unfortunately for some homeowners the wait is a bit longer; in four local authorities, this year’s Mortgage Freedom Day doesn’t arrive until after half of the year has passed. In Haringey (1st July), Kensington and Chelsea (13th July), Camden (24th July) and Hammersmith and Fulham (30th July).
At the other end of the scale, Armagh in Northern Ireland had the earliest Mortgage Freedom Day, which occurred on 13th February – five and a half months earlier than Hammersmith and Fulham. Six of the ten earliest Mortgage Freedom Days this year take place in Northern Ireland, such as in Ballymoney (15th February) and Craigavon (18th February). The remaining four are in Scotland; including East Ayrshire (19th February) and West Dunbartonshire (21st February).
Only one local area in the earliest 150 Mortgage Freedom Days is in southern England; Fenland in Cambridgeshire (23rd March).
Renters have a longer wait….
Renters will have to wait until 12th May to have earned enough to pay off the annual rental costs. In all regions of England, Rent Freedom Day comes after Mortgage Freedom Day. The shortest difference is one week in the West Midlands (15th April against 8th April) with the longest being 46 days in London (5th July against 20th May).
How Halifax calculated the dates –
Average mortgage payments for a new borrower – including both first time buyers and homemovers – are calculated based on average house prices and mortgage rates applicable to the period of calculation. The national average loan to value over the period from 1983 to 2012 of 70% has been applied to the average house price to calculate the average new mortgage in all cases. The mortgage payments include both capital and interest payments.
Mortgage payments are then calculated as a percentage of average disposable earnings (i.e. after deduction of income tax and employee’s national insurance contributions). For UK this figure is 27.1% (quarter 4 2014), which applied to 365 days means that in theory after 100 days – 10th April- homeowners will have earned enough to pay off the annual cost of their mortgage.
Table 1: Earliest Mortgage Freedom Days by Local Authority 2014
|Local Authority||Region||Mortgage Freedom Day|
|Armagh||Northern Ireland||13 February 2014|
|Ballymoney||Northern Ireland||15 February 2014|
|Craigavon||Northern Ireland||18 February 2014|
|East Ayrshire||Scotland||19 February 2014|
|Limavady||Northern Ireland||20 February 2014|
|West Dunbartonshire||Scotland||21 February 2014|
|Carrickfergus||Northern Ireland||21 February 2014|
|Larne||Northern Ireland||22 February 2014|
|Inverclyde||Scotland||22 February 2014|
|Renfrewshire||Scotland||22 February 2014|
Table 2: Latest Mortgage Freedom Days by Local Authority 2014
|Local Authority||Region||Mortgage Freedom Day|
|Hammersmith and Fulham||London||30 July 2014|
|Camden||London||24 July 2014|
|Kensington and Chelsea||London||13 July 2014|
|Haringey||London||01 July 2014|
|Oxford||South East||29 June 2014|
|Brent||London||23 June 2014|
|Cotswold||South West||21 June 2014|
|Islington||London||21 June 2014|
|Purbeck||South West||18 June 2014|
|Lambeth||London||17 June 2014|
Table 3: Mortgage Freedom Days by Region 2014
|Region||Mortgage Freedom Day|
|North||22 March 2014|
|Yorkshire and the Humber||23 March 2014|
|North West||25 March 2014|
|East Midlands||01 April 2014|
|East Anglia||01 April 2014|
|West Midlands||08 April 2014|
|South West||28 April 2014|
|South East||02 May 2014|
|London||20 May 2014|
Table 4: National Mortgage Freedom Days 2014
|Nation||Mortgage Freedom Day|
|Northern Ireland||10 March 2014|
|Scotland||11 March 2014|
|Wales||10 April 2014|
|England||10 April 2014|
|UK||10 April 2014|
Table 5: Rent Freedom Days 2014
|Region||Rent Freedom Day|
|North||08 April 2014|
|Yorkshire and the Humber||09 April 2014|
|East Midlands||10 April 2014|
|North West||11 April 2014|
|West Midlands||15 April 2014|
|East Anglia||15 April 2014|
|South West||16 May 2014|
|South East||19 May 2014|
|London||05 July 2014|
|UK||12 May 2014|