More outright owners than mortgagors among home owners

The number of households buying a home with a mortgage has fallen over the past twenty years, and there are now more outright owners than mortgagors among owner occupiers, a new survey has revealed.

The latest English Housing Survey, Mortgagors 2015/16 published this week by the Department for Communities and Local Government has revealed that among owner occupiers there are now more outright owners than mortgagors. 

Rise in outright owners

In 2015/16, 6.6 million households in England were buying with a mortgage, representing 29% of all households in England.  Among owner occupiers, there were more outright owners than mortgagors, a trend that has been seen since 2013/14.

Between 2005/06 and 2015/16 the proportion of mortgagor households declined from 39% to 29%, whereas outright ownership increased from 31% to 34%.

Age and income of mortgagor rises

The survey also found that the age profile of mortgagors has become older in the last twenty years.  For example, in 2015/16 48% of mortgagors were aged 45-64 while just 18% were aged 16-34 years. Conversely, 44% of private renters were aged 16-34 years.

Mortgagors were also concentrated in the highest income quintiles, with 68% falling into the top two quintiles.  Only 4% were in the lowest income quintile.

More couples (75%) take out mortgages than single buyers, the report found, and more than half of those (56%) had dependent children.

The large majority of mortgagors (97%) were also either very or fairly satisfied with their tenure, compared to 99% of outright owners, 82% of social renters and 67% of private renters.

Repayment vs interest only

Mortgagors in 2015/16 were more likely to be on a repayment mortgage (85%).  Only 7% had an interest only mortgage and 3% an endowment mortgage. 

In terms of income versus repayments, the survey reveals that two thirds (69%) of mortgagors spent less than 20% of their income on mortgage repayments, while only 12% spent 30% or more.  Half of those spending more on repayments were aged between 45 and 64.

Mortgagors in the lowest income quintile were more likely to be spending 30% or more of their mortgage repayments, compared to just 4% in the highest income quintile.

Mortgage value on the up

The report also found that the more recently the mortgage was taken out, the higher the amount borrowed is likely to be. 

The average amount borrowed by households taking out a mortgage in the last year, for example, was £158,000, compared with £59,000 for those taking a mortgage out for 21-25 years ago.

 

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