December 19, 2011
Continuing low interest rates have led to monthly mortgage repayments being at their most affordable level for first-time buyers in nearly eight years, according to Council of Mortgage Lenders.
New figures show that, despite first-time buyers' deposit requirements being at their biggest for almost a generation, monthly interest payments have continued to fall and consume just 12.3% of income on average, the lowest level since January 2004.
And this is not just good news for those new to the market. Affordability for movers also improved, with payments averaging 9.2% of income on mortgage interest, the lowest level since records began in 2002.
However, despite the improved affordability of monthly mortgage payments, deposit requirements, coupled with the uncertain economic outlook, continue to impact negatively on lending activity. 44,500 loans for house purchase (worth £6.5 billion) were advanced in October, down from 48,200 in September and 46,900 a year ago.
The decline in lending affected both first-time buyers and home movers. For example, first-time buyers took out 16,400 loans in October, a 10% reduction from September’s total of 18,200.
"Despite the fall in lending in October, it is possible that we will see signs of increased activity by first-time buyers in the early months of next year, as we approach the end of the government’s stamp duty concession at the end of March,” commented Paul Smee, CML Director General.
“The underlying picture of the market overall, however, is level, albeit at low levels of lending activity."
