Income needed for mortgages at five-year low
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Home owners need to use less of their income to cover their mortgage interest than at any other time for over five years, according to data from the Council of Mortgage Lenders.
The latest figures from the CML show that home movers needed 10.6% of gross income last November to cover mortgage interest payments, down from 11.1% in October.
With the exception of a brief low in 1996, this is the lowest debt burden on home movers since 1974 when the CML started recording this data.
The first-time buyer debt burden also reduced, going from 15.1% of gross income needed in October to 14.4% in November, the lowest it has been since May 2004.
Some 53,000 house purchase loans were advanced in November, down 4% on the previous month but up a massive 66% on November 2008.
Loans for house purchase in November accounted for 60% of total new lending, the highest proportion since 2001.
But remortgage loans fell to 31,000, a 6% drop from October and representing a 39% year-on-year decline.
From the start of last year the percentage of remortgage loans has dropped from 53% to 31% in November.
Michael Coogan, director-general at the CML, says: “It is encouraging to see that mortgage interest payments are so affordable for home movers and first-time buyers.
“But with substantial deposits still needed to secure a mortgage, the market will continue to be relatively restrained for some time to come.
“With refinancing still unattractive or unnecessary for many borrowers due to continuing low rates, we are now seeing a much more house purchase-focussed market, a profile much more like the beginning of the Noughties than its latter years.”
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