Home mortgage cost hits 13-year low
The cost of mortgage repayments for homeowners buying a new property hit a 13-year low during November, figures have shown.
Former owner-occupiers who bought a new home during the month needed to spend an average of just 10.6% of their income on mortgage interest, down from 11.1% in October, according to the Council of Mortgage Lenders.
The group said the figure was the lowest since 1996, when the level of income spent on mortgage interest briefly dropped to 10.2%, but other than that it was the lowest debt servicing burden since its records began in 1974.
It attributed the increase in affordability to mortgage rates continuing to fall as competition returned to the market, as well as a change in the type of mortgage people were opting for, with increased numbers taking out variable rate deals, which currently have lower rates than fixed rate loans.
Only 58% of borrowers opted for a fixed rate mortgage during November, down from 66% in October, with 42% taking out a variable rate one.
There was also an improvement in affordability for first-time buyers, although this was less dramatic.
The average person buying their first home during November spent 14.4% of their pay on mortgage interest, down from 15.1% in October and the lowest figure since May 2004.
But first-time buyers continued to put down average deposits of 25% of their home's value for the 10th consecutive month.
Despite the increase in affordability, overall mortgage lending still suffered its traditional seasonal dip in November. Around 53,000 mortgages were advanced to people buying a home during the month, 4% fewer than in October but still 66% up on November 2008.
Within this there was a 2% drop in the number of first-time buyers purchasing a property with a mortgage during the month at 19,300, although this was still two-thirds higher than it had been 12 months earlier.
Source : Press Association
