Home affordability at its best for 15 years

Mortgage payments for a new borrower are at their lowest as a proportion of disposable earnings for 15 years, according to new research from the Halifax. Typical mortgage payments for new borrowers - both first-time buyers and homemovers - at the long-term average loan to value ratio stood at 26% of disposable earnings in the second quarter of 2012. Overall, mortgage payments have nearly halved as a proportion of income over the past five years from a peak of 48% in Q3 2007. Martin Ellis, housing economist at Halifax, commented: "Lower house prices and reduced mortgage rates have led to a significant improvement in housing affordability for those able to fund the necessary deposit to enter the market over the past five years.  As a result, mortgage payments for a typical new borrower currently account for the lowest proportion of earnings for 15 years. "The relatively low level of mortgage payments in relation to income is providing support for house prices. The prospect of interest rates remaining at low levels for some time yet is expected to continue to be a key factor supporting the demand for homes, helping to keep house prices around their current level during the remainder of 2012." August 31, 2012