Mortgage payments 'at their most affordable since 1997'

Monday, 16 January 2012 09:43

New research has revealed that mortgage payments in the second half of 2011 were at their lowest as a proportion of disposable earnings since 1997.

According to Halifax, typical monthly payments for new borrowers stood at 27 per cent of earnings at the long-term average loan-to-value ratio, far below the 37 per cent recorded over the past 27 years.

The new figure also marked a decline from 29 per cent in the final quarter of 2010 and 48 per cent in the third quarter of 2007.

Halifax attributed the change to lower house prices and reduced mortgage rates for borrowers.

Meanwhile, although all 12 regions of the UK experienced an improvement in affordability of mortgages, there was also a clear north-south divide.

For instance, people in Scotland only see 20 per cent of their disposable earnings taken up for their home loan, while it is 21 per cent for Yorkshire & the Humber and Northern Ireland.

Conversely, those in Greater London and the south-east have to spend the most of their income on their mortgage, at 35 per cent and 33 per cent respectively.

Housing economist at Halifax Martin Ellis said there has been a great boost to affordability for people able to raise the money for a deposit.

"The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012," he added.

Earlier this month, Barclays said that September last year saw the lowest mortgage repayments since records began, averaging 15.2 per cent of take-home pay or £488 a month.

Find the right mortgage for your circumstances

• Tags:
• barclays
,
• first time buyers
,
• halifax
,
• mortgage repayments
,
• mortgages
,
• news