Buying a London property with a mortgage is at its least affordable for a decade, but nationally mortgage affordability has remained steady, according to a study from Halifax.
Across the UK mortgage affordability has remained stable at or around 30% of average disposable earnings for the past decade. The picture may be bleaker for those wanting to buy in London as mortgages become increasingly less affordable, but there is still some way to go before they reach 2007 levels, when mortgage repayments were 52.4% of earnings.
Rising house prices have driven average mortgage payments, as a proportion of disposable earnings, to increase over the past ten years in both London and the South East. London has experienced an 18% increase, putting average mortgage repayments up to 47% of earnings, while South East average mortgage repayments are sizable at 38.8%.
Nationally mortgage affordability has improved over the past decade
Despite falling affordability in London and the South East, the Halifax research shows that mortgage affordability levels have improved nationally over the past ten years. In 2008, a typical mortgage payment accounted for 39% of a homeowners disposable income; today it’s 28.8%.
In Northern Ireland, the cost of maintaining a mortgage has fallen a colossal 20% to 19%, in Scotland the cost has fallen 12% to 18%, and in Yorkshire and the Humber payments remain low at 22.6% as a proportion of disposable income, and in the North West of England at 22%.
Today the most affordable areas are in northern England and Scotland; Copeland in Cumbria is the most affordable where mortgage payments only account for 13% of average local earnings. By comparison, the least affordable areas are London and the South East; average mortgage payments in Brent, Haringey and Hackney are 61% of average local earnings.