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Home affordability improves markedly

Home affordability improves markedly

Category: Mortgages

Updated: 20/04/2009
First Published: 20/04/2009

MONEYFACTS ARCHIVE
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Home affordability has improved significantly in the past eighteen months, with falling houses prices and mortgage rates key to making the market more accessible.

Nationally, typical mortgage payments for a new borrower equate to 31 per cent of average disposable earnings; between July and September in 2007, that average reached a high of almost half (48 per cent) of disposable income.

The research comes from Halifax, which also said mortgage payments relative to earnings are currently below the 25 year average of 37 per cent.

Affordability has actually increased in all 12 regions of the UK since the third quarter of 2007. The biggest percentage falls in average mortgages payments as a proportion of average disposable earnings have been in London (from 56 per cent to 34 per cent) and Northern Ireland (63 per cent to 37 per cent).

Property is most affordable in the regions of Yorkshire & Humber, North West and Scotland, where the ratio stands at a lowly 26 per cent.

Martin Ellis, housing economist, said that the combination of declining house prices and the cut in interest rates had been largely responsible for making housing more affordable than it has been in seven years.

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