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Housing payments unaffordable for many homeowners

Housing payments unaffordable for many homeowners

Category: Mortgages

Updated: 12/11/2013
First Published: 12/11/2013

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 It is now over 6 months old so the content may be out of date.

According to a survey for BBC Panorama, 31% of those paying a mortgage or rent spend more than a third of their disposable monthly income doing so, making such costs "unaffordable" and putting severe pressure on household budgets.

The Ipsos MORI survey, which was conducted among a sample of 1,003 people and commissioned by Panorama, found that a large proportion of homeowners are put in a difficult financial situation.

Shelter and the Joseph Rowntree Foundation define spending more than a third of disposable household income on rent or mortgage payments as unaffordable, suggesting that doing so means individuals "may not be able to afford other basic needs".

Lack of affordable homes could be a key cause of such financial pressures. The survey found that 46% of people think property prices in their area are too high whilst 39% would like to see prices fall, indicating that affordability is still a very real concern for a lot of people – despite Government incentives such as Help to Buy.

However, with mortgage rates at record lows and more stringent criteria ensuring new mortgage applicants can comfortably afford the repayments, hopefully affordability pressures won't become unbearable.

Sylvia Waycot, editor of Moneyfacts.co.uk, comments: "A key concern of anyone taking the first steps to home ownership is what happens if rates rise, will I still be able to afford my home?

"Thankfully these days anyone going through the mortgage approval stage, especially Help to Buy, has to demonstrate not only that they can afford the repayments at today's rates but also that they can afford them if rates increase by 1 or 2%. While this may sound daunting, it makes good sense and ultimately allows you to enjoy your new home without constantly worrying about what ifs."

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