Halifax data shows typical UK mortgage costs buyer 26% of take-home pay, compared with 48% at peak levels in 2007
The cost of buying a home has fallen to its lowest level in 15 years, according to the Halifax banking chain, as separate data showed further downward pressure on house prices.
A typical mortgage on a new property now costs the average buyer 26% of their take-home pay, said Halifax, compared with 48% at their peak in late 2007 before the credit crunch struck.
Price falls and lower interest rates have pushed affordability in parts of the country to their best levels in a generation. In several towns in Scotland, buyers now have to part with 15% of their disposable income to afford a new home, although the improvement in affordability has been greatest in Northern Ireland, where house prices have tumbled most in the UK. In London and south-east England, the average new homebuyer has to part with 32% to 35% of their income to finance a mortgage, compared with 56% in 2007.
Overall, mortgage payments have nearly halved as a proportion of income over the past five years, said Halifax. The research, based on an analysis of local incomes and prices in 383 local authority districts, may give hope to struggling first-time buyers, but the mortgage famine continues. Last week the British Bankers’ Association revealed that net mortgage lending in July was 17% lower than a year ago, while just a few days later Santander increased its standard variable rate from 4.24% to 4.74%.
Ashley Brown, director of mortgage broker Moneysprite, said: “Whatever chinks of light the property market may be showing, the outlook for the mortgage sector is unremittingly dark. Most lenders are simply not interested in borrowers with anything less than a substantial deposit.” House prices fell by 0.1% in August, according to figures published by Hometrack, which said the property market remained”fragile”. In London, which has defied falls elsewhere in the country, prices were unchanged, the first time this year that prices have not increased in the capital.
Thin volumes and a sluggish market will help push house prices down for the rest of the year, said Hometrack. “As the supply/demand balance weakens, we expect to see slow downward pressure on prices over the remainder of 2012,” it said.
On average, homes lie on the market for about 9.5 weeks before finding a buyer said Hometrack, although across the north the figure was three months, a return to the highs of March 2011.
But Martin Ellis, housing economist at Halifax, said: “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 sometime 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.”
The Halifax research named east Ayrshire in Scotland, which includes Kilmarnock and Cumnock, as the cheapest area in the country for buying a home, where the typical mortgage will cost 15% of local income. At the other end of the scale, Kensington & Chelsea remains the least affordable, where buying the average property will cost 77% of the typical local take-home pay. Outside of London, Oxford and Guildford were the next least affordable locations.