Mortgage interest payments rise to 20.6% of incomes

| December 11, 2007 | 0 Comments

The Council of Mortgage Lenders (CML) has published October data on mortgage affordability that reflects both higher interest rates and rising house prices.

During the month, mortgage interest payments accounted for 20.6% of first-time buyers’ monthly incomes.

The figure was up from 20.4% in September, which was its highest level since 1991.

For home-movers mortgage interest payments increased to 17.6% of monthly incomes, up from 17.5% in September and the highest proportion since 1992.

The increases, plus the fact that around 1.4 million homeowners will be coming to the end of their fixed-rate terms in the next year, have heighten fears that repossession are set to rise.

Repossessions are already on the increase and analysts are predicting that they will rise to 30,000 during 2007.

The CML’s director-general, Michael Coogan, is urging homeowners in financial difficulties to contact their lenders as early as possible.

At the same time David Cameron, the leader of the Conservative party, is calling for banks to do more to help householders avoid repossession.

The CML is now expecting a decrease in mortgage lending and Mr Coogan explains: “October is the last month we expect lending volumes to be higher than a year ago as lenders and borrowers will behave more cautiously in an uncertain and slowing market environment.”

He also expects the lending figures “to be driven more by supply factors rather than lower consumer demand.”

In October, the number of new mortgages approved for house purchases made up just 39% of all loans secured on residential property, the lowest proportion for nearly three years.

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