Home loan payments for new borrowers in the UK reached their lowest level in the second half of last year, according to recent research published by Halifax.
The lender said that the typical loan for new borrowers, both first-timers and home movers, stood at 27 percent of disposable earnings in Q4 2011, well below the average of 37 percent seen over the past 27 years.
“Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 1997,” said Martin Ellis, Housing Economist at Halifax.
He noted that the marked improvement in the affordability rate was a key factor supporting housing demand last year. “The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012.”
“This should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households regarding their finances and uncertainty about economic prospects,” he added.
Overall, the study, which tracks housing affordability in 386 local districts across the UK, showed that payment relative to earnings saw a modest decline over the past year, from 29 percent in Q4 2010.
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