The average mortgaged property in the UK has just over 40% equity

by Aaron Strutt

Feb 05 2026

The average loan-to-value ratio on mortgaged homes across the UK has fallen to 59%, down from around 70% in 2012, the Intermediary Mortgage Lenders Association (IMLA) reveals. This means that a typical property has just over 40% equity.

IMLA’s report The New Normal – prospects for 2026 and 2027 reveals that, since the financial crisis, an estimated £677 billion of housing equity has built up across the UK housing stock, through a combination of mortgage repayment and rising property values.

As of 2024, around 42% of private homes carry a mortgage, meaning most properties are owned outright or with relatively modest levels of debt.

IMLA says lower average loan-to-value's have reduced the sensitivity of many borrowers to interest rate movements and strengthened overall market resilience.

However, the association notes that this strength among existing homeowners sits alongside substantial barriers to entry.

Aaron Strutt, product director at Trinity Financial, says: “Having more than 40% equity in your home puts you in a stronger financial position with many of the mortgage lenders. It means you are likely to qualify for better mortgage rates because lenders price their deals based on risk, and lower loan-to-value borrowers are seen as safer.

“More equity opens up a wider choice of lenders and products, whether you are remortgaging, moving house or looking to raise funds for home improvements or to buy a second property. It can help reduce monthly repayments and give homeowners greater financial flexibility. It also provides a valuable cushion if property prices dip.

“Making overpayments can be a smart move, as it reduces your mortgage balance faster and improves your loan-to-value ratio, cutting interest costs over time. That said, borrowers should keep emergency savings intact and check for early repayment charges before committing to large overpayments. Click here to read our blog on mortgage overpayments.”

There were an estimated 28.6 million households in the UK in 2024. This figure comes from the Office for National Statistics and covers all types of occupied homes. About 8.9 million households own their homes outright (no mortgage). Around 7.3 million households own with a mortgage or home loan.

IMLA’s Affordability Paradox 2025 report also highlighted that an estimated 3.5 million potential first-time buyers who might historically have been expected to purchase remain outside the market, many of whom will require innovative mortgage products to get on the housing ladder.

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The information contained within was correct at the time of publication but is subject to change.

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