Home Affordability at 12 Year High – Halifax
Halifax the lender has revealed that disposable earnings applied to mortgage repayments have hit a 12 year high meaning that the average loan to value ration stands now at 28%, from the figures extracted from the second quarter in 2011. This is the lowest level since 1999 and represents a drastic fall from the peak in 2007, quarter 3, of 485 of disposable incomes. This key affordability measure has been dropping since then.
According to Halifax what have driven this fall are the house prices that are lower than in 2007 and the average mortgage rates that are now at 3.85%. However, deposits that home buyers have to put down for new purchases have increased from 20% average in 2007 to 25% in the period covered by this report.
This affordability measure has fallen even more drastically in sixteen district areas to more than 50% where the rest of the country has seen a fall in mortgage payments as a proportion of average earnings of at least 25%.
Martin Ellis, housing economist at Halifax, commented:
“Lower house prices and reduced mortgage rates have resulted in a substantial improaffordability since the peak of the housing market in 2007. Housing is now at its most affordable for 12 years, and mortgage payments for a typical new borrower, compared to average earnings, are now comfortably below the long-term average.
The improvement in affordability has been an important factor supporting housing demand this year. With the prospect of continuing low rates for some time yet, affordability is likely to remain favourable. These affordability gains, together with a slowly improving economy, should help to support demand in the face of pressure from weak earnings growth, relatively high inflation and higher taxes.”
Other Key Facts
- Mortgage payments account for the lowest proportion of disposable earnings Yorkshire & the Humber (23%) and the North West (23%).
- Six of the ten most affordable local authority districts are in Scotland. East Ayshire is the most affordable local authority district in the UK with typical mortgage payments
Accounting for 17.7% of average local earnings. East Ayrshire is followed closely by North Ayrshire (Lanarkshire (18.0%).
- Kensington and Chelsea is the least affordable local authority district in the country with average mortgage payments on a new loan accounting for 75% of average local earnings. Mole Valley (54%) and South Buckinghamshire (51%) both in the South East are the next least affordable.
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