Mortgages are now more affordable than at any other time on record, according to new data from the Council of Mortgage Lenders.
First-time buyers paid an average of 17.8% of their household income towards their mortgage in September, while homemovers paid 17.7%.
The CML said that mortgage affordability was at an historic low, which should help those looking to get on the property ladder.
The improvement in affordability comes after the Bank of England cut interest rates to a new record low of 0.25% in August as part of a range of measures designed to help boost demand following the vote to leave the EU. This resulted in a number of lenders cutting interest rates.
Paul Smee, director general of the CML, said: “Mortgage affordability reached an historic low in September, for both first-time buyers and home movers, which partly reflects the re-pricing of mortgages following August’s base rate cut.
“This should help turn strong appetite for home-ownership into a reality as we approach the closing months of the year.”
Homeowners borrowed £11.4 billion for house purchase, down 7% for the month but up 4% from last year. They took out 62,900 loans, down 5% on August but up 3% on September 2015.
Lending to first-time buyers fell 4% to £4.9 billion, equating to 31,500 loans.
Remortgage activity fell 7% to £5.9 billion, but was up 8% compared to a year ago. This came to 31,500 loans, down 10% month-on-month but up 2% compared to a year ago.
Buy-to-let lending has been hit hard by the stamp duty changes that were introduced in April. Landlords borrowed £2.8 billion, down 7% for the month and 22% since last year.
Smee said: “House purchase activity appears to have steadied, we may not be seeing huge increases in activity on the scale of 2013-14 but there is a consistency in the levels in recent months.
“Six months on since the stamp duty changes on second properties and buy-to-let continues to operate at lower levels than a year ago. But lending for buy-to-let house purchase and remortgaging has settled at its current level over the last four months.”
David Brown, CEO of Marsh & Parsons, said: “Low interest rates have improved affordability for buyers and helped drive activity for those who can get great deals. Therefore, while uncertainty remains about the outcome of Brexit negotiations, confidence in property remains high for hopeful homebuyers, investors and sellers.
“In London, particularly, the market could still be buoyed by the weaker pound and added interest from overseas buyers – boosted by results of the US Presidential election as Americans potentially seek solace elsewhere.
“What is important now is that the Chancellor uses his upcoming Autumn Statement to consider measures to help drive activity in the property market and help buyers onto the property ladder so that momentum is maintained.”
