The average borrower’s mortgage payments now account for just over a quarter (27%) of monthly outgoings, according to research by the Halifax, the lowest level seen since spring 1999 and well below the 30-year average of 36%.
A split between the southern England and the rest of the UK has continued to develop with mortgage payments taking up as little as 17% of disposable earnings in Northern Ireland and 19% in Scotland.
This compares to 36% in Greater London, 34% in the South East and 32% in the South West. In the London borough of Camden mortgage payments now take up more than half of borrowers’ earnings (53%).
However, all areas of the country were more affordable than at the start of 2007, the lender said.
Craig McKinlay, mortgage director at Halifax, that the Funding for Lending Scheme had helped drive down the cost of mortgages since its launch in August 2012.
“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,” he said.
“The Funding for Lending Scheme has helped lenders to 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.”