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Mortgages at their most affordable for a decade

Mortgage payments as a proportion of income have fallen by more than two-fifths in the UK in recent years, according to new Halifax research. At the moment, the average monthly take-home wage in the UK is £2,062 and the average monthly mortgage payment is £580.

“Mortgage affordability has improved significantly over the past few years as a result of falls in house prices and cuts in mortgage rates,” said Martin Ellis, housing economist at Halifax. “This development has been a key factor supporting housing demand and is expected to remain so in 2013 as interest rates remain low.”

Typical mortgage payments for new borrowers at the long-term average loan to value ratio have been stable at 28% of disposable earnings since mid-2011. This is the lowest level since early 2002 and is comfortably below the average of 36% recorded since 1983, says the Halifax.

Mortgage payments are at their lowest as a proportion of disposable earnings in Northern Ireland (20%), Scotland (22%), Yorkshire and the Humber (23%) and in the North West (23%). 

Payments are highest in relation to earnings in Greater London (36%), the South West (35%) and the South East (34%). 

Seven of the ten most affordable local authority districts are in Scotland. Copeland in the North West is the most affordable local authority district in the UK, with typical mortgage payments accounting for 14.9% of average local earnings. Copeland is followed by West Dunbartonshire in Scotland (17.6%) and Hyndburn, Renfrewshire and North Ayrshire (all 17.9%).