Over the course of a decade, London mortgages have become increasingly less affordable, despite remaining below the 2007 peak when mortgage payments accounted for more than half (52.4%) of earnings, Halifax revealed.
The bank found that mortgage affordability across the UK has remained at, or just below, the 30% of average disposable earnings since 2009, with the top ten least affordable areas being in London and the South east, while the most affordable areas can be found in Scotland and the North West of England.
However, over the past ten years, average mortgage payments in London, as a proportion of disposable earnings, have increased by 18%, from 40% cent in 2008 to 47% today, driven by house price increases, according to Halifax.
Meanwhile, the cost of maintaining a mortgage in Northern Ireland now only takes up half of the average earnings, at 19% compared to 39% in 2008, while in Scotland it is 18% compared with 30% in 2008.
Furthermore, the research highlighted that typical mortgage payments accounted for over a quarter (28.8%) of homeowners’ disposable income in 2018, indicating that mortgage affordability levels for home movers have improved significantly by 39% since 2008.
Commenting, Halifax mortgage director Andy Bickers said: “Despite rising house prices and interest rates, the average UK earnings have also risen in line, meaning that national affordability has remained broadly flat. This is good news for first-time buyers, homeowners and a boost to the housing market.”
East Anglia and London had the largest reductions in affordability, while Scotland and the South East saw the biggest improvements in affordability, with mortgage payments dropping 9% as a proportion of average disposable earnings.
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