Affordable mortgages benefit first-time buyers and home movers


Mortgage payments often make up a relatively large chunk of any homeowner’s monthly outgoings, but right now they still account for less than they have historically – particularly in certain parts of the UK.

According to data from Halifax, the proportion of homeowner income allocated to mortgage repayments is the smallest it has been since the mid-1990s. Data from the last three months of 2017 shows that a typical mortgage payment accounts for less than 29% of a homeowner’s disposable earnings.

In 2007, mortgage payments accounted for almost half of a borrower’s income, and the average between 1983 and 2017 was 35%. The lowest figure on record was 23.6% in the spring of 1996. Halifax’s findings are based on mortgage payments for a new borrower including first-time buyers and home movers.

Regional variations show huge differences in affordability

Naturally regional variations apply. London is unsurprisingly the least affordable with some boroughs’ average mortgage payments taking up to 60% of typical disposable income, whilst in Yorkshire and the Humber and the north-west, mortgage payments account for 23% of borrowers’ salaries. In Northern Ireland, mortgage payments are the lowest as a proportion of disposable income at 19%, with Scotland and the north-east at 20%. If you are buying in the south-east you can expect to surrender 40% of your income and in the south-west it’s 34%.

A boost for first-time buyers and home movers

With mortgage payments as an average only taking up 29% of a borrower’s wages, Andy Bickers, mortgage director at Halifax said: “This is a boost for those who have a mortgage and those preparing to take their first step on to the property ladder.”

Historically low interest rates have helped mortgages become affordable, and whilst rates are expected to rise they currently remain low; so, buyers can still secure a mortgage that is a manageable percentage of their income. For buyers that might be looking to move area, exploring other regions in terms of their mortgage affordability would be worth considering, especially in those areas where mortgage payments may only absorb 23% of disposable income.

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Affordable mortgages benefit first-time buyers and home movers


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