Mortgage repayments most affordable in 12 years
Saturday, 27 August 2011 12:00 AM
The proportion of disposable income devoted to mortgage repayments – a key affordability measure – is at its most favourable for 12 years, claims research out today.
According to the Halifax Affordability Review, typical mortgage payments for a new borrower – both first-time buyers and home movers – across the UK in the second quarter of 2011 hit an average loan-to-value (LTV) ratio of 28 per cent.
This is the lowest level since 1999 and down by almost a half from the third quarter of 2007, when mortgage repayments hit a peak proportion of 48 per cent of the average disposable income.
Lower house prices and reduced mortgage rates have contributed the most to improvements in affordability in all local authority areas since 2007. Meanwhile, the average deposit put down by buyers has increased over the same period from 20 per cent to 25 per cent.
Mortgage payments account for the lowest proportion of disposable earnings in Scotland (22 per cent), Yorkshire & the Humber (23 per cent) and the North-West (23 per cent).
Eight of the ten local areas to have experienced the biggest improvement in affordability since mid-2007 are in Northern Ireland.
Carrickfergus has seen the biggest improvement in mortgage repayments as a percentage of average earnings, with the figure having dropped 63 per cent.
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