Based on the average annual mortgage repayment cost of £7,584 and the average net annual income of £26,0233, Halifax has calculated that homeowners with a mortgage will have today earned enough on average to cover their mortgage payments for the rest of 2016.
Mortgage Freedom Day this year occurs just a day later than in 2015 (18 April), and is the result of average annual mortgage repayment edging up by £17 during the year. Rental Freedom Day, on the other hand, comes 16 days later on the 5th May – again a day later than in 2015.
There is a wide variation in Mortgage Freedom Day across the country, with home owners in Scotland and Northern Ireland achieving this on 12th March, followed by Yorkshire and the Humber (25th), the North West (26th) and the North (27th). Mortgage Freedom Day for Londoners doesn't arrive until 26th June - three months later than in northern England.
Craig McKinlay, Mortgage Director, Halifax, commented:
“For most homeowners, mortgage payments are the biggest outgoing every month; knowing they’ve earned enough to pay off their mortgage for another year should be a reassuring thought. On the other hand, those who rent will need to work a further couple of weeks to have earned enough to cover their annual rental cost."
Jeremy Duncombe, Director, Legal & General Mortgage Club, added:
“In theory, Mortgage Freedom Day is the day that borrowers have earned enough to pay their mortgage for the rest of the year, but the truth is that very few people will be in this position, since mortgage repayments are normally just one of many monthly expenses.
“Nonetheless, Mortgage Freedom Day provides a good opportunity to think about how much of your monthly income is going towards your mortgage. At the moment, borrowers are enjoying historically low interest rates, but it’s important to remember that mortgage rates are not directly linked to Base Rate, which means that circumstances could change at short notice. Anyone who is thinking about remortgaging should therefore speak to a broker as soon as possible, as the deals currently on offer will not last forever.”
