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Mortgages becoming more affordable

Mortgages becoming more affordable

Category: Mortgages

Updated: 10/09/2009
First Published: 10/09/2009

MONEYFACTS ARCHIVE
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Mortgages continue to become ever more affordable, accounting for just 29% of an individual's disposable earnings in August.

According to the Halifax, the proportion of disposable earnings devoted to mortgage payments has fallen significantly over the past 21 months.

Typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in the third quarter of 2007 to 29% today.

Notably, mortgage payments relative to earnings are now below the long-term average of 35% recorded over the past 25 years.

Meanwhile, house prices have continued their recovery, rising by 0.8% in August, the second successive monthly increase.

It means the average price of a home now stands at £160,973, broadly similar to the level seen at the end of last year.

"Demand for housing has increased since the start of the year due to better affordability and low interest rates," said Martin Ellis, housing economist at Halifax. "This, together with low levels of property available for sale, has boosted house prices over the last few months."

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