Mortgage interest payments are consuming less of borrowers’ incomes as those able to get a mortgage are stretching themselves less financially and beginning to benefit from reductions in bank rate, according to new data from the Council of Mortgage Lenders. Interest payments typically consumed 18.2% of a first-time buyer’s income in November, the lowest proportion since February 2007. Home movers in November typically spent 14.4% of their income on interest payments, the lowest proportion since April 2006.
Lenders have cautiously tightened their lending criteria as a result of the shortage of funding and falling house prices. The improvement in affordability is largely due to the fact that borrowers who are able to obtain credit are lower risk and less stretched.
There were 12,400 loans to first-time buyers worth £1.4 billion in November, compared with 15,400 loans worth £1.8 billion in October. The average first-time buyer put down a deposit of 18%, the largest it has been in 35 years of available data. And first-time buyers typically borrowed 3.07 times their income, the lowest level since September 2005.
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Article by the Council of Mortgage Lenders.
Data partially sourced from the CML/BankSearch Regulated Mortgage Survey.