Today is 'mortgage freedom day'

http://www.theguardian.com/money/2014/apr/10/mortgage-freedom-day

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Feel like a slave to your mortgage? Today, 10 April, is "mortgage freedom day" – the first day in the year when, according to calculations by the Halifax, a typical new borrower will have finally earned enough to pay off the annual cost of their home loan.

But it's bad news for buyers in London. Mortgage freedom day is still weeks away for anyone purchasing a home in the capital's super-heated property market. They effectively have to work until 20 May just to pay the mortgage bills. The residents of the London borough of Hammersmith and Fulham are at the sharp end, on average having to work until 30 July – seven months into the year – to earn enough to pay off the typical mortgage in the area.

In more evidence of the spiralling cost of housing, the figures show that renting is worse than buying. On average, renters have to wait until 12 May to earn enough to pay off the annual costs to the landlord, rising to 5 July in London.

The Halifax calculated 10 April as mortgage freedom day, based on the average annual mortgage repayment cost of £6,954 and the net annual income of £25,603. It then varied the figures to take account of local wages and house prices.

Craig McKinlay, mortgage director at the Halifax, said: "While monthly mortgage and rental costs account for the majority of many people's household budgets, mortgage freedom day provides a different perspective on how much we spend on these costs over the course of a year.

"Our research shows that today, if people had put everything they'd earned since the start of the year towards their mortgage, the average homeowner would be mortgage-free for the remainder of the year, which is a reassuring thought."

The Halifax figures come amid widening concern about the pace of property price rises. Earlier this month Nationwide building society reported that house prices in London have increased by almost a fifth over the past 12 months, and are now 20% above their pre-crisis peak. Properties in much of the south-east have also moved above their 2007 peaks, although in Northern Ireland they remain substantially below.

The first part of the UK to enjoy mortgage freedom day is Armagh, when it arrives on 13 February, and by 10 March the average homebuyer in Northern Ireland has earned enough to pay off their mortgage. Scotland follows on 11 March, then the north of England on 8 April.

The concept of mortgage freedom day follows similar analysis applied to personal taxes. Campaigners against taxes celebrate "tax freedom day" in the US, calculated this year as 21 April. The Tax Foundation said it will be three days later in 2014 than 2013, which it attributes to the country's "continued slow economic recovery".

In Britain, the Adam Smith Institute calculates that the country will have earned enough to pay its annual tax bill by 28 May – three days sooner than last year.