Mortgages at their most affordable in five years
Home buyers needed to use less of their income to cover their mortgage interest in November than at any time for more than five years, the Council of Mortgage Lenders (CML) has reported.
Home movers were particularly well placed, typically needing only 10.6% of gross income to cover mortgage interest payments, down from 11.1% in October.
According to the CML, this is the lowest debt burden on home movers since records began in 1974, apart from a brief low of 10.2% in mid-1996.
First-time buyers also saw an improvement, allocating 14.4% of gross income to cover mortgage interest payments, down from 15.1% in October and with the proportion at its lowest since May 2004.
Meanwhile, lending volumes experienced a seasonal dip in November 2009: the month saw house purchase approvals fall to 53,000, down 4% on October, but still representing a 66% increase on a year earlier.
Remortgaging approvals declined 6% on the previous month and were down 39% year-on-year, at 31,000.
Commenting on the data, CML director general, Michael Coogan, cautions that the substantial deposits currently needed to secure a mortgage mean the market will be “relatively restrained” for some time.
He adds: “With refinancing still unattractive or unnecessary for many borrowers due to continuing low rates, we are now seeing a much more house purchase-focused market, a profile much more like the beginning of the Noughties than its latter years.”