Mortgage payments for a new borrower in the second half of 2011 were at their lowest as a proportion of earnings for 14 years.
Typical mortgage payments for a new borrower – both first-time buyers and home movers – stood at 27% of disposable earnings in the fourth quarter of 2011.
This is well below the average of 37% recorded over the past 27 years, said the Halifax.
Mortgage payments have nearly halved as a proportion of income, from a peak of 48% in 2007.
However, there is a clear north-south divide.
Mortgage payments account for the lowest proportion of disposable earnings in Scotland (20%), Yorkshire & the Humber and Northern Ireland (both 21%). Payments are highest in relation to earnings in Greater London (35%) and the South-East (33%).
The ten most affordable local areas are all in northern Britain while the ten least affordable areas are all in the south.
Martin Ellis, housing economist at Halifax, said: “The 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.
“The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels.
“This 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.”
.jpg)
%20(002).png)
%20A%20property%20tale%20for%20our%20times.png)
Comments
Lots of EAs on this site get fired up by news that prices might be falling... Fun Boy Agent, Brian and Anna to name just three. Chris often writes from the perspective of a BTLer on the subject of prices and Ray has asked posters several times not to throw the phrase "house price crash" about in case it becomes a self-fulfilling prophecy. Concerned of Tunbridge Wells even rewrites thousands of years of human economic history in an effort to dismiss the idea that UK house prices can, let alone might, come down.
There are plenty of EAs with BTL portfolios, who have their pension all in the property basket etc who post on this site. Their vested interest is just as real as the HPCers, but going the other way.
EAs without this secondary vested interest of course know that transactions is what keeps them employed, not price levels.
"They don't get it that EA's dont give a hoot about prices. EA's look more to transaction counts. "
Oh dear anon, you've not thought that one through properly have you.
I refer you to the most recent article on EAT re: new listings.
Unless, of course, your branch is 'bucking the trend'.
^
I
I
I
I
More HPC comments and bile up here please.
This is the HPC page, only for the HPC numpties to talk amongst themselves. This is the bait to keep them off the 'real' stories. They don't get it that EA's dont give a hoot about prices. EA's look more to transaction counts.
This is the page like your jam trap in the summer to catch those pesky wasps. And its working.
Good, innit?
Read the HPC bile here.
I
I
I
I
V
FTB Opinion, i'm not reading into anything. The OP correctly inferred that - due to selective lending (ie high deposit requirements) and low rates - it stands to reason that current FTBs are having to pay-out a low proportion of their income.
The fact that you had a 25% deposit arguably doesn't make you a 'typical' FTB.
It's also worth mentioning (as HPC's resident IFA has pointed out) that the term 'FTB' is very loose insomuch that it includes anyone out of the housing market for over 12 months (ie emigrants and STRs), and in the case of seperation.
In short - and i'm not knocking you - the stat in the article above doesn't necessarily indicate good value for housing, which is what it's trying to suggest.
@Unhappy
20% refers to % of take home pay. Correcting a typo in my initial post.
I'm not going to overpay as such but I will be saving elsewhere. NS&I index-linked certificates for example. Unlimited overpayments mean that I can shovel it into the mortgage should BoE rate rise significantly. But I reckon I'll have the thing "paid off" by the time that happens.
@SBC
I think that you are seeing what you want to see. The article specifically refers to mortgage payments as a % of take home pay. 2.89% mortgage interest rate is low in anybodys book. Mortage payments at 20% of my take home or 12% joint take home is definitely affordable.
My LTV is 75%. I weighed-up the purchase price (25% down from 2006), the cost of finance (dirt cheap), added a dash of guesswork and decided to buy.
Ps Only unhappy today as i have the dentist!
FTB - May I suggest you make overpayments if you can.....ps what is the 20% reffering too?
FTB Opinion, I think that pretty much backs-up the OP.
To be on 2.89% indicates a low LTV, i'm guessing around 60-70%?
Last time I checked current FTBs stand at an average of 80% LTV; coupled with low mortgage rates explains the data. Doesn't necessarily mean affordable housing which the article is inferring.
20%
@errr, no!
I don't agree. I was recently a bog standard FTB. My mortgage is currently at 2.89% on a repayment basis (205 of my take home pay).
That is peanuts and the main reason that I took the plunge and bought even though I think prices will probably fall in real terms for a good 5 more years.
What nonsense - maybe, based on interest only ! If this were the case people wouldn't be worried about their fuel bill or an extra apple on the shopping trip etc.....
The figure is probably also based on lending within the last 12 months - of which very little of it was done to the average joe (unless you didn't really need one and then your interest rate was little over 0%)