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Mortgages at most affordable for 35 years

Mortgages at most affordable for 35 years

Category: Mortgages

Updated: 12/07/2010
First Published: 12/07/2010

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 It is now over 6 months old so the content may be out of date.
Borrowers moving home have seen the proportion of their income they spend on mortgage interest payments drop to its lowest level in 35 years.

Home movers continue to benefit the most from the current low interest rates, according to the Council of Mortgage Lenders (CML), with interest payments accounting for only 9.5% of their income in May.

It is the lowest percentage recorded since the survey began in 1975.

There was also better news for first time buyers after a small rise was revealed in the number of mortgage loans advanced to those looking to take their first step onto the property ladder.

In securing their loan, they borrowed an average of 3.14 times their income and 75% of the value of their property.

However, interest payments accounted for only 13.2% of their income, the lowest level reported since March 2004.

The number of loans approved for anyone buying a home also increased during May, as did the number agreed for remortgages.

However, the CML believes the positive trend is likely to tail off in the second half of this year, with the challenging economic backdrop, Government spending cuts and forthcoming tax increases all predicted to take their toll.

"House purchase lending continues its recovery but positive comparisons with equivalent months a year ago look unlikely to continue," warned CML Director General Michael Coogan.

"Activity picked up in the second half of 2009 due to the stamp duty holiday, but, with the Government's austerity drive picking up momentum, we are unlikely to see a repeat of those buoyant numbers this year."

If you're looking to take your first step onto the property ladder, take a look at our first time buyer best buy chart to see a selection of some of the best first time buyer mortgages currently available.

Find the best mortgage rate - Compare best selling mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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