Home loans in the UK will remain affordable until 2016, at a base rate of 0.5 percent, according to the Centre for Economics and Business Research, an economic think-tank.
Last week, the Bank of England kept mortgage rates at a record low for the 34th consecutive month.
“Even when rates go up they are likely to go up gradually, reaching 1.25 percent in 2017 and it could take until 2019 to reach three percent,” said Scott Corfe, who works at the centre.
In particular, first-time buyers and new borrowers are reaping the benefits, with mortgages at their most affordable levels in 14 years. According to a report published by Halifax bank, monthly mortgage payments for first-timers and homeowners looking to refinance their mortgages stood at an average of 27 percent in Q4 2011, the lowest since 1997, when it stood at 26 percent.
“Falls in house prices and cuts in mortgage rates have resulted in a significant improvement in housing affordability,” said Martin Ellis, Housing Economist at Halifax.
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