Mortgages more affordable for new borrowers

| August 28, 2012 | 0 Comments
Mortgages more affordable for new borrowers

Although mortgages are at their most affordable for 15 years, approvals are at an all-time low.

A new report from the Halifax reveals that payments on mortgage loans now account for around a quarter of take-home pay, due to record low interest rates of 0.5 per cent and weak house prices in many areas.

The Halifax expects the continuing low interest rates to help keep house prices steady for the rest of the year.

However figures from the British Bankers’ Association for June show mortgage approvals at their lowest ever level.

When the credit crunch hit the UK in autumn 2007 mortgage payments accounted for nearly half of household income.

Since then, mortgages have become more affordable in every part of the UK, especially in Northern Ireland where they have fallen by around two-thirds, while they have halved in Scotland, Wales and Yorkshire and the Humber.

Typical mortgage payments now account for around 20 per cent of disposable earnings for house-purchasers in Scotland, compared with 26 per cent for the UK as a whole.

The 10 most affordable local authority districts in the UK are all in Scotland: East Ayrshire, West Dunbartonshire, North Ayrshire, Renfrewshire, North Lanarkshire, South Ayrshire, Falkirk, Inverclyde, Clackmannanshire and the city of Dundee.

However, despite the increasing affordability of mortgage repayments, lenders have tightened up their borrowing criteria since the credit crunch to such an extent that potential house buyers are struggling to find the high deposits needed.

The high cost of borrowing on wholesale financial markets has also caused many lenders to raise their standard variable rates (SVR), with more than a million home owners finding their mortgage repayments increasing significantly as a result.

Home loans often offer a lower initial rate which then reverts to the lender’s SVR when the bonus period ends.

Tags: ,

Comments (0)

Trackback URL | Comments RSS Feed

There are no comments yet. Why not be the first to speak your mind.

Leave a Reply

Visited 718 times, 39 so far today