Mortgage affordability - you've never had it so good

Posted in 'Neighbourhood' by Barry Stamp

19 January 2012

According to the Halifax Affordability Review, which looks at how easy it is for potential new mortgage borrowers to enter the housing market, mortgage payments have almost halved as a proportion of income.

In 2007 the average loan to value ratio for new mortgage borrowers peaked at 48% in 2007, but lower house prices and reduced mortgage rates have now driven this ratio down to 27%.

Averages tend to conceal local realities and the picture is very different depending on where you live. A north south divide is clearly evident on close study of the tables provided with the review, with seven of the most affordable areas being in Scotland, and three in the North of England. East Ayrshire is the most affordable place to be a new borrower, with typical mortgage payments accounting for 15.7% of average local earnings, followed closely by West Dunbartonshire and North Ayrshire, both at 16.2%

There’s no real surprise that London and the South East are the least affordable places to live in terms of mortgage borrowing. Kensington and Chelsea is the least affordable are with typical mortgage payments on a new loan accounting for 78% of average earnings, Brent comes in at 54% and Hammersmith & Fulham at 50%.

To compare how your own mortgage affordability ratio compares to the extremes of 15.7% and 78%, you simply divide the average price of the house you live in – which you can find for free by using our Free Check Any Postcode service - by your gross income.