Mortgages in the
UK are now more affordable than at any time since the 1990s according to a
report from the Halifax, a major UK lender. This is partly due to the schemes
introduced by the UK government, namely Funding for Lending and Help To Buy,
which have had the effect of making the proportion of income spent on a
mortgage lower now.
report by the Halifax suggested that monthly home loan payments now constitute
only 27 per cent of average monthly income as oppose to 48 per cent when the
proportion was at its highest in 2007. Of course, this does not mean that it is
any easier to obtain a mortgage if you are a first time buyer but for those
that do, they can console themselves that they are paying less than they would
have been 7 years ago as a percentage of their income on average. Home owners
in the more expensive parts of London and the South East are unlikely to feel
this effect due to the continuing high house prices in some areas with the
average London mortgage payment now comprising 36 per cent of income.
This improved affordability can
be attributed to lower mortgage rates and a fall in
house prices in many areas of the UK over much of the time since the credit
The Funding for Lending scheme
has encouraged banks and building societies to reduce the interest rates they
charge for home loans, which has continued to result in a small improvement in
affordability over the past year even while house prices have begun to rise in
A BBC report stated that the
average proportion of income new borrowers spent on their mortgage over the
past 30 years is 36 per cent. In some areas then the current proportions are
well below this long-term average; in Scotland for example mortgage payments
are a mere 19 per cent of income on average and in Northern Ireland even less
at an average of 17 per cent. The data also reveals that home owners in Wales
pay 27 per cent of their income on mortgage payments with the same figure in
the South East being 34 per cent.
extreme ends of these figures parts of London were least affordable at over
fifty per cent of income and most affordable in parts of Scotland and Northern
Ireland at under 15 per cent.
The fact that large mortgages
are now much more affordable than in the past is a clear indication that the
property market in the UK is at last starting to become buoyant again after so
long in the doldrums. This is supported by the fact that more new homes are
being built as constructions firms become more confident about the future and
the ability of first-time buyers to secure a mortgage deal.
In the opinion of a London
mortgage broker it is not surprising that house purchasers are finding
mortgages more affordable than ever with interest rates at record-breaking
lows. Even buyers in London and the South East, among the most expensive parts
of the country, are seeing improved affordability. However, it is not expected
that large mortgages will remain so affordable for too long.