UK Housing Costs Surge 41% Over Five Years, Mortgage Interest Payments Hit Record High
New data from the property group Savills reveals a staggering 41% increase in UK housing costs over the past five years, reaching a record £226 billion in 2025. This represents a rise of £66 billion since 2020, highlighting the growing financial burden on households across the nation.
Mortgage Borrowers Bear the Brunt of Rising Costs
Savills identified a particularly sharp spike in mortgage interest payments, which grew by 9% in 2025 to £53.6 billion. This surge accounted for more than half of the overall increase in housing costs, with borrowers coming off fixed-rate deals facing the hardest hits. The total bill for 8.8 million mortgage holders, including capital repayments, reached £114 billion in 2025, translating to an average annual payment of £13,000 per borrower.
Lucian Cook, head of residential research at Savills, warned that this trend could persist due to economic turmoil. "In a market where homeowners are fixing their mortgages for longer, the impact of higher interest rates on housing costs – and on households’ ability to spend elsewhere in the economy – tends to have a much longer tail," he said. Cook added that recent global events, such as strikes in the Middle East, could trigger persistent inflation, further pressuring mortgage markets.
Rental Market Shows Slower Growth but Remains Costly
In contrast, rental costs increased more slowly, rising by 2.75% to £112 billion in 2025. Private sector landlords received £81 billion of the total, averaging £15,000 per property. Over the past five years, private renters have seen their bills climb by 27%, adding to the affordability crisis in many regions.
Regional Variations in Housing Cost Increases
London experienced the smallest percentage increase in overall housing costs at 36% over five years, compared to 49% in the north-west and 45% in both the north-east and eastern England. Despite this, London still accounts for the largest share of Britain's housing costs, making up 23.4% of the total.
Market Stability Amid Global Uncertainty
According to Rightmove, the property market remains steady despite global tensions. New seller asking prices rose by an average of £3,023 in March to £371,042, a typical seasonal increase of 0.8%. The number of homes for sale is at an 11-year high for this time of year, which has limited more significant price growth. Rightmove noted that sales are only 2% behind last year's strong market and 5% above 2024 levels, indicating resilience in the face of economic challenges.
As mortgage rates continue to fluctuate, with the average two-year fixed-rate topping 5% recently, households are urged to prepare for potential further increases in housing expenses. The ongoing inflation concerns and geopolitical events could shape the housing landscape in the coming years, making affordability a key issue for policymakers and consumers alike.
