Mortgage rates have fallen more than two percentage points since mid 2007, or 48% of the average disposable income in mid-2007 to 28% in July. This is a significant drop on the long-term average of 37% over the last 25 years.
The drop has been driven by a fall in fixed rates, said the lender.
There has also been a modest pick-up in housing activity with 49,200 approvals in July – the third increase in a row – and 2.5% higher than a year earlier.
Mortgage lender the Halifax predicts stability for the housing market in the coming months despite a price fall of 1.2% in August.
The low volume of sales was creating volatility from month to month, said its housing economist Martin Ellis, and the more reliable quarterly figures recorded a rise of 1%.
“Low interest rates are likely to continue to support the market whilst increased uncertainty about the economic outlook and pressures on householders’ finances constrain demand. Overall, we expect broad stability in both prices and activity over the coming months,” he said.
The average house price in August fell to £161,743.
Nicholas Ayre, a director of UK buying agents Home Fusion, said: “Prices may well have risen 1% over the past three months but the 1.2% decline in August, double that observed by the Nationwide, carries more symbolic weight.
“A double dip in the economy is becoming more and more realistic, and if the economy goes down, the property market will go down with it.
“The low interest rate environment, competitive mortgage finance at higher LTVs and the low supply of housing are providing a degree of support to prices, but there is no guarantee they will withstand the weight of economic collapse.
“As ever, certain areas of the UK, specifically London, are proving more resilient to house price falls.”
