New research from Lloyds Bank indicates that the affordability of UK homes, when compared to earnings, has reached an 11-year low. The average UK home now costs 7.3 times median earnings, a decrease from 7.6 in 2025, marking the lowest ratio since 2015.
Between the second quarter of 2025 and the second quarter of 2026, the average UK house price increased by 0.5% to £299,131, while median earnings rose by 4.5% to £40,790. Despite this narrowing gap, higher mortgage rates are counteracting the trend, making home ownership difficult for many.
Data from Moneyfacts shows that the average two-year fixed-rate mortgage deal stands at 5.93% as of 1 October, an increase from 4.83% on 27 February. Lloyds also suggested that the average monthly mortgage payment increased from £1,100 to £1,157 between Q2 2025 and Q2 2026.
Affordability has also improved for first-time buyers, with the average property price for this group rising by 0.3% to £239,681 between Q2 2025 and Q2 2026. The average UK first home now costs 5.9 times median earnings, down from 6.1 in 2025, also the lowest figure since 2015. However, saving for a deposit, typically around £24,000 for a 10% deposit, remains a significant challenge.
London and the South East continue to be the least affordable regions, although their house price to income ratios have fallen. Northern Ireland was the only UK region where homes became less affordable, with house prices rising by 7.4% compared to a 3.7% rise in median earnings.