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Mortgage costs at five year low

Mortgage costs at five year low

Category: Mortgages

Updated: 14/05/2009
First Published: 14/05/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
First time buyers and home movers are benefiting from the lowest mortgage costs in almost five years, according to the latest monthly research from the Council of Mortgage Lenders (CML).

For those with deposits large enough to enable them to buy, the combination of low interest rates and lower house prices means that their monthly interest payment now equates to only 15.1% of their income, the lowest proportion since June 2004.

Meanwhile, the number of mortgages approved for house purchase amounted to around 31,000 in March, a 29% rise on the previous month.

Within these figures, first time buyers accounted for 40% of all loans granted, up from 38% the previous month and the highest proportion seen since April 2005.

"Because the flow of lending is still constrained, there is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can't," said Bob Pannell, CML head of research. "For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years. This is good news for now but a mortgage is a long term commitment. People borrowing now should be mindful of the years ahead when interest rates eventually rise, as they will."

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