Camden’s mortgage burden most manageable in UK but property market least open to new buyers

Camden has the lowest loan-to-income ratio for owner occupiers in London

Camden has the lowest loan-to-income ratio for owner occupiers in London - Credit: Archant

New research suggests that Camden homeowners are among the best insulated against interest rate rises and have some of the most manageable housing debt in the country thanks to greater average age and wealth of owner occupiers.

A report from estate agent Savills analysed the value of properties and household incomes across the UK in relation to the outstanding mortgage debt and found huge variations in the figures across the country.

The study found that northern England and Wales had higher average outstanding loan-to-value mortgages, while London and the South East had the highest average loan-to-income ratios. Areas exposed to both are most at risk when rates rise.

Conversely, Camden had the lowest average outstanding loan-to-value mortgage of 15 per cent compared to the national average of 48 per cent.

Despite house prices that are among the highest in the country with a current average value of £1,070,543, mortgaged Camden homeowners have an average mortgage debt of only £155,814.

London owner occupiers generally had lower mortgage debt despite the value of houses being six times higher than the rest of the country thanks to strong price growth since 2008 but Camden beat neighbouring boroughs including Barnet (37 per cent); Haringey (22 per cent); and Westminster (17 per cent).

High property values mean that, on the whole, Londoners were more stretched on a loan-to-income ratio despite what Savills call their “equity cushion”, with outstanding mortgage debt higher in relation to average household incomes than those in less expensive parts of the country.

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However, Camden, with an average household income (based on two average earners) of £91,898 also has the lowest loan to income ratio in the country of 1.7.

Lucian Cook director of research at Savills said that Camden’s low level of mortgage debt despite high property values suggests an older, wealthier home owning demographic than many other boroughs.

He said: “I think it’s a combination of things. It’s older people who’ve paid down significant levels of mortgage debt and have benefitted from very high capital growth.

“It’s also a reflection of the type of owner occupiers in Camden who tend to be much more affluent people with much less reliance on mortgage debt when they move.”

The figures also point to a lack of younger or first time buyers in the borough, despite 69 per cent of residents being aged 45 or under.

Despite comparatively high household incomes, even higher average house prices meant that Camden was one of the least affordable places to buy a home in the UK with a house price to income ratio of 11.65.

With lending capped at 4.5 times income by the Mortgage Market Review the figures do not look good for aspiring first time buyers in Camden.