News: Halifax claim UK mortgages most affordable for a decade

Mon, 21 Jan 13


UK mortgages are at their most affordable level in a decade, according to Halifax. The UK lender’s research reveals that mortgage payments as a proportion of income have fallen by more than two-fifths in the UK in recent years, from a peak of 48% in Q3 2007 to 28% in Q4 2012.

The average monthly take-home wage in the UK is £2,062 and the average monthly mortgage payment is £580, explains Halifax, which attributes the improved affordability to lower house prices and reduced mortgage rates.

Mortgage payments for a new borrower have remained at their lowest level in relation to earnings for a decade. Typical mortgage payments for a new borrower - both first-time buyers and homemovers - at the long-term average loan to value ratio1 have been stable at 28% of disposable earnings since mid 2011. This is the lowest level since early 2002 and is comfortably below the average of 36% recorded since 1983.

Martin Ellis, housing economist at Halifax, commented: 'Mortgage affordability has improved significantly over the past few years as a result of falls in house prices and cuts in mortgage rates. This development has been a key factor supporting housing demand and is expected to remain so in 2013 as interest rates remain low.

'The favourable mortgage affordability position is a boost for both those who already have a mortgage and those who are able to raise the required deposit to buy a home. Higher deposit requirements and low, or negative levels, of housing equity for many homeowners, however, mean that significant numbers of would-be home buyers and movers remain unable to enter the market.'

See also: Mortgages

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