UK housing costs record 2025 as households spent £226 billion last year to cover mortgages, rent, and related payments, according to data from Savills. The total is up 41% over five years, an increase of £66 billion, even as the pace of annual growth slowed.
Mortgage Resets Drive the Biggest Pressure
Savills pointed to mortgage borrowers coming off fixed-rate deals as the main source of fresh strain. Total spending rose by about £8 billion last year, a smaller increase than in prior years. But within that figure, mortgage interest jumped 9% to £53.6 billion, accounting for more than half of the overall rise.
Including regular capital repayments, Savills estimates the annual bill for 8.8 million mortgage holders reached £114 billion in 2025. That implies an average cost of about £13,000 per borrower per year.
Inflation Risks Add Uncertainty for 2026
Savills warned that the pressure may linger because UK borrowers have increasingly fixed mortgages for longer terms. That structure can delay the full impact of higher rates, but extend it once borrowers eventually refinance.
Lucian Cook, Savills’ head of residential research, said 2026 had looked like it might bring some relief, but that outlook has become less clear due to inflation risks linked to wider economic turmoil. Mortgage markets tend to price those risks quickly.
Recent pricing shifts underline that sensitivity. The average rate on a two-year fixed mortgage moved above 5% last week, up from 4.84% at the end of February, while lenders have been withdrawing deals and raising rates.
Rent Costs Rise More Slowly but Stay Large
In the rental market, Savills said costs increased at a gentler pace, rising 2.75% to £112 billion in 2025. Of the £226 billion total housing spend, £81 billion went to private landlords. That equates to roughly £15,000 on average, and Savills said the bill for private renters has risen 27% over five years.
Regional trends were uneven. London recorded the smallest percentage increase in overall housing costs over five years at 36%, compared with 49% in the north-west and 45% in both the north-east and eastern England. Even so, London still represents the largest share of Britain’s housing costs, at 23.4% of the total.
House Prices Edge Up as Supply Caps Gains
Rightmove reported that 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 remains at an 11-year high for this time of year, which Rightmove said is limiting stronger price growth.
Despite global uncertainty, Rightmove described market conditions as steady. It said sales volumes are about 2% behind last year’s strong level and 5% above 2024.
