Borrowers’ monthly mortgage payments fell to a 10-year low in 2011 as lenders competed to offer some of their cheapest deals, according to research from Barclays.
In an analysis of over one million customers’ accounts, the lender says that on average people paid out 15.4% of their take home pay to cover their mortgage payments last year.
This compares to 20.5% when it reached its highest point in 2008, and is the lowest proportion since September 2001.
Furthermore, a survey commissioned by Barclays shows the majority of homeowners say they are more comfortable with their current payment levels compared to this time last year.
It found that 83% have room for manoeuvre should their circumstances or interest rates change and 64% find their mortgage affordable, compared to 52% this time last year.
Just 40% of homeowners think interest rates will rise in 2012, compared to 74% who were asked at the beginning of 2011 about the year ahead. A quarter of homeowners believe rates will start to rise in 2013.
The majority, 73%, of homeowners do have a plan in place for when interest rates start to rise, with around a third stating they will cut spending elsewhere by reducing their lifestyle budget and holidays to cover any increases.
Andy Gray, head of mortgages at Barclays, says: “With the cheapest ever mortgage deals offered to homeowners last year in a fiercely competitive market it stands to reason that the average monthly mortgage payment was at its most affordable level in a decade.
“However Barclays is urging homeowners not to be complacent with this affordability and to act early on in 2012 to secure good mortgage deals, as they may be able to cut their monthly mortgage payments further.”