Less than a third of homeowners’ disposable income goes towards mortgage payments each month, making mortgages more affordable than they’ve been for a decade.
According to new research from Halifax, homeowners typically spent 29% of their monthly earnings on mortgage payments in the final three months of last year, compared to almost half their income (48%) in the third quarter of 2007. Low interest rates have been the main driving factor behind improved affordability.
Andy Bickers, mortgage director at Halifax, said: “This is a real boost for both those who already have a mortgage and those preparing to take a step on to the property ladder.”
Over the past 35 years, an average of 35% of homeowners’ income has been put towards paying their mortgages.
The period when the lowest proportion of homeowners’ income was taken up by mortgage payments was in the spring of 1996, when just 23.6% of disposable income went towards paying homeloans.
Mortgage affordability has improved in most areas of the UK, Halifax said, although there are marked regional variations.
Mortgage payments are at their lowest as a proportion of income in Northern Ireland (19%), Scotland and the North (20%). They are at their highest in the south where property prices are steepest, with 45%, 40% and 34% of average disposable earnings in London, the South East and South West respectively devoted to mortgage payments.
The 10 most affordable local authority districts are all in Scotland and the North West, whilst the 10 least affordable are mainly in London and the South East. The least affordable areas in the country are in Brent and Haringey, where typical mortgage payments account for 61% of average local disposable earnings.
Copeland in Cumbria is the most affordable area, with typical mortgage payments accounting for just 15% of local average earnings.
Mortgages at their most affordable for a decade