Where are the most affordable mortgages in the UK?
Mortgage payments account for the lowest proportion of disposable earnings in Northern Ireland (20%) followed by Scotland (22%), according to figures from Bank of Scotland. This compares with the UK average of 28%.
Mortgage payments as a proportion of income have fallen by more than two-fifths in Scotland in recent years, from a peak of 38% in the last three months of 2007 to 22% over the same period in 2012. Lower house prices and reduced mortgage rates have been the main drivers behind the significant improvement in affordability. The average monthly take-home wage in Scotland is £1,954 while the average monthly mortgage payment is £424.
Typical mortgage payments for a new borrower at the long-term average loan to value ratio have been broadly stable at 21-22% of disposable earnings over the past two years. This is the lowest level since 2002-03 and well below the average of 30% recorded since 1983.
West Dunbartonshire is the most affordable local authority district in Scotland and the second most affordable in the UK with typical mortgage payments accounting for 17.6% of average local earnings. West Dunbartonshire is followed by Renfrewshire, North Ayrshire (both 17.9%) and South Ayrshire (18.0%).
Aberdeenshire is the least affordable local authority district in Scotland. Average mortgage payments on a new loan amount to 27.8% of average local earnings in Aberdeenshire. Perth & Kinross (27.3%), Edinburgh (27.0%) and East Renfrewshire (26.7%) are the next least affordable areas in Scotland.
Nitesh Patel, housing economist at Bank of Scotland, said: “Mortgage affordability has improved significantly over the past few years as a result of falls in house prices and cuts in mortgage rates. This development has been a key factor supporting housing demand and is expected to remain so in 2013 as interest rates remain low.
“The favourable mortgage affordability position is a boost for both those who already have a mortgage and those who are able to raise the required deposit to buy a home. Higher deposit requirements and low, or negative levels, of housing equity for many homeowners, however, mean that significant numbers of would-be home buyers and movers remain unable to enter the market.”mortgages
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