Most affordable mortgages in 14 years coincide with bright times for the UK property market

A study by Halifax has highlighted that mortgages are now at their most affordable levels since 1999, after many lenders have reduced their rates.

The bank’s research shows that mortgage payments accounted for just 27% of average incomes in the second quarter of the year compared to a high of 48% in 2007. Where once mortgage payments were the biggest concern for a household, energy bills are now overtaking that position. Click here.

One of the primary influencing factors could be the introduction of the Funding for Lending Scheme (FLS). The scheme, which was introduced in July 2012, allows banks and building societies to borrow money from the Bank of England at cheaper than market rates. This provides an incentive for banks to increase their lending, particularly to businesses, by lowering interest rates.

Of course, the extremely long period at which the Bank of England base rate has been at a historic low will also have contributed substantially.

Craig McKinlay, the Mortgage Director for Halifax, commented on the remarkable improvement. He commented:

Substantial mortgage rate reductions and lower house prices have led to a significant improvement in mortgage availability since the peak of the housing market six years ago.”

“The Funding for Lending scheme has helped lenders to cut mortgage rates, causing a further modest improvement in affordability over the past year, despite the modest rise in house prices nationally.”

The research also shows the mortgage payments for new borrowers as a proportion of income has a clear regional divide, but this time in favour of the North.

They were most affordable in Northern Ireland, where payments accounted for just 17% of income, followed by Scotland at 19%, Yorkshire and the Humber at 22% and North-West England at 23%.

London, the South East and the South West showed the highest levels with payments accounting to 36%, 34% and 32% of incomes respectively.

This positive news coincides with other signs that the property market has been bursting back into life in recent months. The Housing Minister, Mark Prisk MP, had this to say:

“This is another clear sign that the housing market has turned a corner, alongside new figures showing the numbers of new homes started is up by a third compared to last year and the numbers of first-time buyers are at their highest since 2007.”

The research also comes at a time where figures show the rates of house price inflation are continuing to grow, with prices in the year to June 2013 rising by 3.1% on average, up from 2.9% in May.

All indicators point to this being a good time to get back into property.

If you are purchasing a house, with or without a mortgage, and require expert advice from a Chartered Surveyor; find a local professional at or contact the survey desk directly to find out how our members can be of assistance.

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SRJ / LCB                                                                                                                    23/08/2013

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