Mortgage payments for new borrowers are now more affordable than they have been for 14 years according to new research from Halifax.
The lender looked at average monthly mortgage costs as a proportion of disposable income for new borrowers – both first time buyers and homemovers. It found that in the 4th quarter of 2011, typical mortgage payments were 27% of disposable income – well below the long term average of 37%, recorded over the past 27 years.
There’s been a marked improvement in affordability over the last few years in particular – mortgage payments have nearly halved as a proportion of income from a peak of 48% in 2007. Halifax highlighted lower house prices and reduced mortgage rates as the main drivers behind this improvement.
Barclays published similar research last week showing that affordability based on more than 1 million of its own customers’ mortgages was at its lowest level since records began 10 years ago. It also mentioned a recent survey it commissioned which found that the majority of homeowners said they are mortgage comfortable with their current mortgage payments than they were a year ago.
On the subject of budgeting for 2012, the top three concerns for homeowners were energy bills, the cost of running a car and the cost of food.
If you’re looking to cut costs this year, then your mortgage is a good place to start – check your current mortgage rate and see if you could save by switching to a new deal. Many borrowers will already be on competitive rates, but others could cut their monthly payments considerably by finding a new mortgage deal. If you can save on your mortgage, it can help offset other outgoings that may be rising such as food and utilities.
Try our simple 1 minute mortgage check to see if you could save money on your mortgage.