April 16 is Mortgage Freedom Day

Today is Mortgage Freedom Day – the day by which borrowers have earned enough money to cover their repayments for the whole of 2019.

It takes homeowners until April 16 to earn the £8,729 the average person spends on their mortgage each year, based on a typical annual income of £28,752 after tax, according to Halifax.

Andy Bickers, mortgages director, Halifax, said: “If every penny earned this year went towards their mortgage today would be the day that the average UK borrower could celebrate paying off their mortgage for the year.”

Mortgage Freedom Day also fell on April 16 in 2018, suggesting there has been little change in affordability for homeowners in the past year, despite the Bank of England base rate rising by 0.25% in August last year.

There has also been little change in the date since 2014, with it moving back by just six days, mainly due to wage growth and house prices remaining broadly stable during the period.

Why is this happening?

Mortgage repayments are the single biggest monthly expense most homeowners face, so it is unsurprising that it takes an average of nearly a third of a year for people to earn enough to cover them.

But interest rates at close to record lows and intense competition among mortgage lenders, have helped Mortgage Freedom Day remain relatively stable during the past five years.

Who does it affect?

Unsurprisingly, there is significant regional variation in when Mortgage Freedom Day occurs.

It comes soonest for people living in Scotland, arriving on March 8, while those in Northern Ireland can celebrate in on March 12.

The day also falls in March for homeowners in the north and north west.

At the other end of the scale, people in Greater London have to wait until June 20 before they have earned enough to pay their mortgage for the whole year, while it takes until May 22 for people in the south east and until May 5 for those in the south west.

In terms of individual local authorities, Copeland in Cumbria has the earliest Mortgage Freedom Day of February 18, and Brent in London has the latest one, with homeowners having to wait nearly seven months more until September 5.

What’s the background?

People who rent a home have to wait an average of 10 days longer than homeowners before they have earned enough to pay for their accommodation for a year, with Rent Freedom Day coming on April 26.

Like Mortgage Freedom Day, the date is unchanged compared with 2018.

But while regional variations follow similar patterns to those for Mortgage Freedom Day, the gap between the various dates is bigger for those who rent their home.

Northern Ireland has the earliest Rent Freedom Day of March 24, followed by the north at April 1.

Greater London again had the latest date, although at July 30, it comes more than a month later than Mortgage Freedom Day.

Top 3 takeaways

• April 16 is Mortgage Freedom Day – the day by which borrowers have earned enough money to cover their repayments for the whole of 2019

• Northern Ireland has the earliest Mortgage Freedom Day of March 12 and Greater London has the latest one of June 20

• Rent Freedom Day comes 10 days later, falling on April 26