By Frances Traynor
24th April 2018
Wed 11 Apr 2018 by Frances Traynor
There's good news for both homeowners and those keen to buy for the first time – mortgages are more affordable now than they have been in a decade, according to new figures.
Halifax research has revealed that a third of homeowners' disposable income (29 percent) went on their mortgage repayments in the last three months of 2017. That compares to the 48 percent of disposable income that had to be spent on mortgage payments in the third quarter of 2007.
According to the Halifax, the increased affordability has been helped by interest rates that have remained historically low, despite the first Bank of England base rate rise in a decade in November.
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Its research used the average take-home pay – £2,039 per month in the last quarter of 2017 – and the average monthly mortgage repayment – £669 over the same period – to calculate mortgage affordability, taking into account local house prices, mortgage interest rates and local earnings.
The most affordable local authority area to live in is Copeland in Cumbria. Mortgage payments there are just 15 percent of average local pay. The London boroughs of Brent and Haringey are the least affordable with homeowners forking out 61 percent of their monthly salary on mortgage payments.
Andy Bickers, mortgage director at Halifax, said: "This is a real boost for both those who already have a mortgage and those preparing to take their first step on to the property ladder.
"Improved mortgage affordability has been a key factor supporting housing demand and helping to stimulate the modest recovery that we are currently seeing.
"In recent months, we have seen the number of first-time buyers and homemovers purchasing a home with a mortgage bounce back towards 2007 levels, and mortgage payments becoming a much smaller proportion of disposable income across most of the country will also support a heathy market with more choice and opportunity for buyers/borrowers."
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