Mortgages have hit the most affordable levels for 14 years, according to research from Halifax, which found that payments now account for 27 per cent of a new borrower’s income.
This is well below the average of 36 per cent recorded over the past 30 years.
Mortgage affordability reached a peak in 2007, at an average 48 per cent of income.
Lower house prices and reduced mortgage rates have been the main drivers behind the significant improvement in affordability.
There have been significant improvements in affordability in all local authority districts since 2007. Mortgage payments have fallen by at least a half as a proportion of average earnings in 24 areas. More than four in five areas (82 per cent) have seen an improvement of at least a quarter.
Nonetheless, there remains a clear north / south divide. Mortgage payments are at their lowest as a proportion of disposable earnings in Northern Ireland (17 per cent), Scotland (19 per cent), Yorkshire and the Humber (22 per cent) and the North West (23 per cent). Payments are highest in relation to earnings in Greater London (36 per cent), the South East (34 per cent) and the South West (32 per cent).
The 10 most affordable local areas are all in northern Britain, while the 10 least affordable areas are all in the south.
Craig McKinlay, Mortgage Director, Halifax said: “Substantial mortgage rate reductions and lower house prices have led to a significant improvement in mortgage affordability since the peak of the housing market six years’ ago. The Funding for Lending Scheme has helped lenders to cut mortgage rates causing a further modest improvement in affordability over the past year despite the modest rise in house prices nationally.
“Significant numbers of would-be home-buyers and movers remain unable to enter the market due to higher deposit requirements than a few years’ ago and low, or negative, levels of housing equity. However, the recent figures showing 10,000 aspiring home-owners have already signed up to the Help to Buy scheme shows the potential of the Government backed schemes to continue to improve access to the market.”
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