New figures from the Halifax show that mortgages have fallen to their most affordable level since 1999.
The Halifax Affordability Review, which tracks nearly 400 local authority districts, measures the degree of difficulty faced by a potential new borrower in entering the local housing market dependent on current average house prices, mortgage rates and average earnings.
It found that average mortgage repayments are now 21% lower than in 2007, just before the financial crisis struck. And they are 25% below the long-term average.
New borrowers now spend 27% of their income on mortgage repayments, the lowest since Q2 1999, according to the study.
Mortgages are 11 percentage points more affordable today than the long-term average of 36% over the past 30 years, which suggests the current house price resurgence could have some way to go.
Every local authority district has seen significant improvements in affordability. 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%) have seen an improvement of at least a quarter.
The North/South divide remains, however with 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 at 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 cut mortgage rates causing a further modest improvement in affordability over the past year despite the modest rise in house prices nationally.
"The favourable mortgage affordability position is a boost for both those who already have a mortgage and those who are able to raise the required deposit to buy a home. Improved mortgage affordability has been a key factor supporting housing demand and is helping to stimulate the modest recovery that we are currently seeing.
"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."
Comments