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Mortgage payments marginally less affordable

Monday, 16 January 2012 9:01 AM

Mortgage payments became slightly less affordable against earnings in the final quarter of 2011 but remain well below the long-term average, according to new research from the Halifax.

The bank’s affordability review says typical mortgage payments accounted for 27 per cent of disposable earnings in the fourth quarter of 2011 That is slightly up on the 26 per cent seen in the third quarter.

However, it compares to an average of 37 per cent over the last 27 years. And, thanks to lower house prices and interest rates, mortgage payments have nearly halved as a proportion of income since reaching a peak of 48 per cent in the third quarter of 2007.

Northern Ireland has seen the biggest improvement of any of the 12 UK regions, with payments falling from 63 per cent of disposable earnings in 2007 to 21 per cent now.

In Great Britain, mortgages are now most affordable against income in Scotland (21 per cent) and Yorkshire and Humberside (21 per cent) and least affordable in London (35 per cent) and the South East (33 per cent).

Martin Eillis, Halifax housing economist, said: "The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012.”

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