House-price affordability has improved on an income measure, but payment affordability remains challenging. Lloyds says the average UK home now costs 7.3 times average annual earnings, down from 7.6 times a year earlier and the lowest ratio for 11 years, as wage growth outpaces house-price inflation. Yet higher mortgage rates mean the monthly cost of borrowing remains a material obstacle for many buyers and remortgagors.
Advisers should avoid presenting the improved price-to-earnings ratio as a simple affordability breakthrough. AI-based affordability tools can model payment resilience across different rates, terms and deposit levels, but should be used to support—not replace—a full assessment of expenditure, future changes in circumstances and client risk appetite. The key advice message is that lower relative property prices do not necessarily mean lower monthly commitments.