For the first time in over four and a half years, this June homebuyers’ average income crept above £40,000.
The National Mortgage Index from Mortgage Advice Bureau (MAB) revealed that the average income has not crept above £40,000 since January 2009 when the data was first collected. The figure was 2 per cent higher than May’s £39,648 and 9 per cent higher than June’s £37,164.
Using data from more than 500 brokers and 800 estate agents, the National Mortgage Index also shows that purchase prices grew by 1.4 per cent in the month and by 4.5 per cent since June 2012 to £224,450.
Affordability has therefore improved gradually over the last year as a result of prices growing at a slower rate than incomes. However, homebuyers’ average income has grown significant more (by 9 per cent) than annual inflation (2.7 per cent) or average weekly earnings (3.7 per cent) suggesting that more affluent borrowers are driving up the average as they take advantage of the housing market recovery.
This trend has been especially visible across Greater London, the South West, the Midlands and the North where homebuyers’ typical incomes have risen by 10 per cent or more since June 2012. Only three regions – the South East, East Anglia and Wales – saw average incomes fall.
Growing interest in the property market contributed to a 31 per cent increase in the volume of purchase applications between the first and second quarters of 2013. Despite a 2 per cent drop between May and June, quarterly purchase applications were up by 58 per cent compared with the second quarter of 2012.
June also witnessed the highest volume of remortgage applications since the financial crisis – 6 per cent more than in May and 83 per cent up on June 2012. Remortgage loan to values (LTVs) have shifted noticeably in the last year with the typical application now involving 5 per cent less equity (59.6 per cent LTV – June 2013 vs. 54.6 per cent LTV – June 2012).
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