2011 was a good year for new mortgage borrowers, as it has been revealed that mortgage payments for a new borrower were at their lowest in more than ten years.
In the second half of 2011, mortgage payments for new borrowers were at their lowest as a proportion of disposable income for 14 years.
In the fourth quarter of 2011, the typical payment for a new borrower ñ both first time buyers and home movers ñ at the long-term average loan to value ratio stood at 27% of disposable earnings.
This is down from 29% recorded in the fourth quarter of 2012, and well below the 37% average of the past 27 years.
Research carried out by Halifax bank found that mortgage payments have nearly halved, in terms of a proportion of income, since 2007.
ìThe falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market,î said Martin Ellis, a Housing Economist at Halifax.
ìMortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 1997.î
This is good news for first time buyers across the country, as the research found that 95% of local areas in the UK have seen a fall in mortgage repayments, as percentage of income, of at least 25%.
ìThe marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012,î added Mr Ellis.
ìThis should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households regarding their finances and uncertainty about economic prospects.î
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