The amount of money people are paying for their monthly mortgage repayments is at its most affordable level for 12 years.
Figures from Halifax show that typical mortgage payments for new borrowers in the UK – both first time buyers and homeowners – fell to 28% of average disposable earnings in the second quarter of 2011.
It is the lowest level seen since 1999 and is down by almost half from a peak of 48% of average disposable earnings seen in 2007 quarter three.
There has also been a modest decline over the past year from 30% in 2010 quarter two, reducing mortgage payments relative to earnings further below the average of 37% recorded over the past 27 years.
All 12 regions in the UK have experienced the improvement in affordability since mid 2007 with affordability better than the long-term average in all regions.
The most substantial percentage falls in average mortgage payments as a proportion of average disposable earnings have been in Northern Ireland (-62%) and Wales (-45%).
Locally, the falls in house prices and mortgage rates have also led to improvements in affordability in all local authority districts since 2007.
Sixteen areas have recorded an improvement of 50% or more. The overwhelming majority - 94% - have seen a fall in mortgage payments as a proportion of average earnings of at least 25%.
"Lower house prices and reduced mortgage rates have resulted in a substantial improvement in housing affordability since the peak of the housing market in 2007," said Martin Ellis, housing economist at Halifax.
"Housing is now at its most affordable for 12 years, and mortgage payments for a typical new borrower, compared to average earnings, are now comfortably below the long-term average.
"The improvement in affordability has been an important factor supporting housing demand this year.
"With the prospect of continuing low rates for some time yet, affordability is likely to remain favourable.
"These affordability gains, together with a slowly improving economy, should help to support demand in the face of pressures from weak earnings growth, relatively high inflation and higher taxes."
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