Mortgage costs fall to most affordable level - Mortgages - News - Moneyfacts

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Mortgage costs fall to most affordable level

Mortgage costs fall to most affordable level

Category: Mortgages

Updated: 17/12/2012
First Published: 09/01/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Homeowners' monthly mortgage payments fell to their most affordable level since records began in 2011.

On average, people paid out 15.4% of their take home pay last year to cover their monthly mortgage payments, compared to 2008 when it reached its highest point at 20.5%, figures from Barclays show.

The lowest point since records began 10 years ago was in September 2011 when the average mortgage payment fell to 15.2%, or £488 a month.

The figures are supported by separate research which found the majority of homeowners say they are more comfortable with their current payment levels compared to this time last year.

Of the millions of homeowners in the UK , 83% have room for manoeuvre should their circumstances or interest rates change and 64% find their mortgage affordable, compared to 52% this time last year.

Fewer homeowners think interest rates will increase this year - just 40% think interest rates will rise in 2012, compared to 74% who were asked at the beginning of 2011 about the year ahead.

In addition, a quarter of homeowners believe rates will start to rise in 2013.

But people are being urged not to be complacent with this affordability and to act early on in 2012 to secure good mortgage deals, as they may be able to cut their monthly mortgage payments further.

"With the cheapest ever mortgage deals offered to homeowners last year and the fiercely competitive mortgage market it stands to reason that the average monthly mortgage payment was at its most affordable level in a decade," said Andy Gray, head of mortgages at Barclays.

"We know that other financial factors are likely to bite again this year, but homeowners can't afford to forget about their mortgage just because base rate is predicted to remain at record lows throughout 2012.

"The cost of energy bills, running a car and food may be beyond their control, but homeowners have an opportunity to look at their mortgage payments and shop around for better deals to ensure their mortgage remains affordable during 2012 and beyond, which will also help to offset any other rising household costs."

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