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Affordability highest for 14 years

by: Mortgage Solutions
  • 18/01/2010
  • 0
Research by the Council of Mortgage Lenders (CML) has revealed that affordability for home movers is at its highest level for 14 years.

Home movers needed just 10.6% of their gross income to cover their mortgage repayments in November, down from 11.1% in October.

The debt burden of new mortgages also reduced to 14.4% of gross income in November, down from 15.1% in October, meaning that first-time buyers are using less of their income to cover their mortgage interest than at any time in the last five and a half years.

CML director general Michael Coogan said: “It is encouraging to see that mortgage interest payments are so affordable for home movers and first-time buyers. But with substantial deposits still needed to secure a mortgage, the market will continue to be relatively restrained for some time to come.”

He added that with refinancing still unattractive or unnecessary for many borrowers due to continuing low rates, the market’s outlook is now focused more on house purchases, which gives it a profile much more like the beginning of the century than of late.

Gary Smith, president of the National Association of Estate Agents, said: “The figures are encouraging, considering that mortgage loans have increased by 67% since November 2008.

However, that was possibly the nadir of the housing market. It is hardly surprising that the percentage of income on mortgages has decreased given the general interest rate cuts.”

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