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Scotland has the UK’s most affordable housing

Mortgage payments for a new borrower in Scotland during the second half of 2011 were at their lowest as a proportion of disposable earnings for nine years, according to new Bank of Scotland research.

Typical mortgage payments for a new borrower – both first-time buyers and homemovers – at the long-term average loan to value ratio stood at 20% of disposable earnings in the fourth quarter of 2011. This is well below the average of 30% recorded over the past 27 years.

Overall, there was a modest fall in payments relative to earnings over the past year from 21% in 2010 Quarter 4.

Mortgage payments have nearly halved as a proportion of income in recent years from a peak of 38% in 2007 Quarter 4. Lower house prices and reduced mortgage rates have been the main drivers behind the significant improvement in affordability.

Mortgage payments account for the lowest proportion of disposable earnings in Scotland (20%). This compares with the UK average of 27%.

Seven of the ten most affordable local authority districts (LADs) in the UK are in Scotland. East Ayrshire is the most affordable local authority district in the UK with typical mortgage payments accounting for 15.7% of average local earnings. East Ayrshire is followed closely by West Dunbartonshire and North Ayrshire (both 16.2%).

Edinburgh is the least affordable local authority district in Scotland with average mortgage payments on a new loan accounting for 26.2% of average local earnings. Aberdeenshire (25.9%), Perth & Kinross (25.6%) and Highland (25.5%) are the next least affordable LADs.