"Outlook looks very encouraging"
Mortgage affordability improved in November for the second month running, according to new data from Stonebridge.
The mortgage and protection network’s Mortgage Affordability Index revealed that monthly repayments accounted for 36.3% of the average borrower’s salary in November. This marks a notable drop from 38.7% in October and 40% in September.
Stonebridge noted that the last time mortgage payments were this affordable relative to incomes was in November 2022, when repayments made up 34% of an average salary. The improvement stems from a combination of factors, including lower mortgage rates, wage growth, and reduced loan sizes.
Data from the Bank of England shows the average interest rate on newly drawn mortgages fell from 4.61% in October to 4.5% in November. At the same time, figures from the Office for National Statistics indicate an increase in average wages over the same period.
Internal figures from Stonebridge, which oversees more than £12 billion in mortgage lending annually, show a 4.7% reduction in average loan sizes in November, providing additional relief for borrowers.
The Mortgage Affordability Index combines official wage and mortgage rate data with Stonebridge’s own loan statistics to evaluate how affordable mortgages are for the average borrower.
“Mortgage affordability improved for the second month in a row in November, offering some much-needed breathing room for borrowers buying or refinancing,” commented Rob Clifford (pictured), chief executive at Stonebridge.
“While rising funding costs have pushed up fixed rate mortgages since the start of the year, there’s no need for borrowers to panic. There are still plenty of great deals available, and borrowing costs remain well below the level they were for much of last year.
“Looking ahead, the outlook looks very encouraging. Markets are predicting up to three rate cuts this year, while the Bank of England governor recently hinted at as many as four reductions in 2025. The extent to which the central bank cuts rates will be determined by the path of inflation, of course, but the signs suggest that mortgage costs should reduce throughout 2025, which will provide further relief to borrowers.”
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