- UK households spent a record £226bn on housing in 2025.
- Mortgage interest payments jumped 9 per cent to £53.6bn.
- Average mortgage holders now pay around £13,000 a year.
UK housing costs reached a record £226bn in 2025, as higher mortgage payments continued to squeeze household finances. New figures from property group Savills suggest many homeowners, especially those rolling off fixed-rate mortgage deals, are now facing noticeably bigger monthly bills.
The data shows UK housing costs have climbed by £66bn over the past five years, a rise of 41 per cent. While the pace of increase slowed slightly last year, the overall burden on households remains significant.
Spending rose by £8bn in 2025, or 3.6 per cent, compared with much sharper jumps of £22bn in 2023 and £19bn in 2024. Even with that slowdown, housing remains one of the largest expenses for households across the country.
Mortgage interest doing most of the damage
A major part of the rise is coming from mortgage interest payments. Savills said the amount households paid in mortgage interest climbed 9 per cent to £53.6bn last year, accounting for more than half of the overall increase in housing costs.
For the UK’s 8.8 million mortgage holders, total payments — including regular capital repayments — reached £114bn in 2025. On average, borrowers are now paying about £13,000 a year on their mortgages.
Lucian Cook, head of residential research at Savills, warned the impact of higher interest rates may linger longer than expected.
“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,” Cook reportedly said, as quoted in a news report.
He also suggested the outlook for relief in borrowing costs has become less clear.
“Until recently, 2026 looked set to offer some respite, but that is now less certain given the prospect of another wave of inflation, which mortgage markets are typically quick to price in,” he reportedly said.
Last week, the average two-year fixed mortgage rate moved above 5 per cent, rising from 4.84 per cent at the end of February, with lenders pulling several deals and adjusting rates upward.
Rents rising, but more slowly
The rental market has also seen rising costs, though the increase has been less dramatic than for mortgages. Savills estimated total rental spending reached £112bn in 2025, up 2.75 per cent.
Out of the total housing bill, about £81bn was paid to private landlords. Private renters are now paying an average of £15,000 a year, with rental costs rising 27 per cent over the past five years.
Regionally, housing costs have grown fastest outside London. The north-west recorded a 49 per cent rise, while north-east England and eastern England both saw increases of around 45 per cent. London experienced a smaller increase of 36 per cent, although the capital still accounts for the largest share of the UK’s housing spending at 23.4 per cent.
Meanwhile, fresh data from property website Rightmove suggests the housing market itself remains relatively stable. New seller asking prices increased by £3,023 in March, bringing the average to £371,042 — a seasonal rise of 0.8 per cent.
The number of homes available for sale is at an 11-year high for this time of year, which analysts believe is helping keep price growth in check.
Rightmove said the market appeared “steady” despite wider global uncertainty linked to the Iran conflict, with the number of agreed sales running 2 per cent below last year’s strong market but still 5 per cent higher than in 2024.
