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First Time Buyer

Mortgages at most affordable level for 10 years

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
19/03/2018

Homeowners now spend less than a third of their disposable income on mortgage payments.

Mortgages in the UK have reached their most affordable level in a decade, according to Halifax.

The lender revealed that typical mortgage payments accounted for less than a third (29%) of homeowners’ disposable income in the final quarter of 2017, compared to almost half (48%) in 2007.

The increase in affordability since 2007 has been driven by historically low mortgage rates, despite the first base rate rise in a decade last November.

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 their first step on to the property ladder. Improved mortgage affordability has been a key factor supporting housing demand and helping to stimulate the modest recovery that we are currently seeing.

“In recent months we have seen the number of first-time buyers and homemovers purchasing a home with a mortgage bounce back towards 2007 levels, and mortgage payments becoming a much smaller proportion of disposable income across most of the country will also support a heathy market with more choice and opportunity for buyers/borrowers.”

Mortgage affordability has improved in the vast majority of areas since 2007, with repayments falling by at least 30% as a proportion of average earnings in 35 Local Authority Districts.

The greatest improvements were mostly in Northern Ireland, where affordability has been boosted by a significant fall in house prices, which are now 44% lower than in 2007.

In England, the most significant improvement has been in South Bucks, where the proportion of average disposable earnings devoted to mortgage payments has fallen sharply from 93% to 53%, a reduction of 40 percentage points in the past decade.

However, there is still a significant North-South divide with the 10 most affordable local areas all in northern Britain, and the 10 least affordable areas in the south.