The cost of servicing mortgages across England and Wales fell by 0.1 per cent in July to 18.4 per cent of household take-home pay, compared to 18.5 per cent in June 2005, according to the latest monthly figures from Woolwich Mortgage Affordability Research.
The national fall was helped by a decrease in London to 22.7 per cent compared to a peak of 23 per cent in February 2003, and 0.2 per cent fall in the North- East from 16.2 per cent in June 2005 to 16 per cent in July.
Richard Saulet, head of mortgage development for Woolwich, said: “The fall in mortgage payment costs during July means that we have now come off the peaks of 18.5 per cent that have been posted several times in the last six months. If as expected the Bank of England cut interest rates this week then mortgage affordability should improve further, freeing up consumer income for other spending.
“The last time the Bank of England cut interest rates was July 2003. The cut of 0.25 per cent brought rates to the lowest in a generation at 3.5 per cent and had the immediate impact of cutting mortgage payment costs by 0.2 per cent. However, this was at a time of fast house price growth which had the effect of increasing mortgage costs quickly. We are now in a period of slow growth where earnings are increasing faster than house prices, you can expect to see a sizeable fall in the cost of servicing mortgages if interest rates are cut.”
Across the rest of the country only Wales and the East-Midlands saw increases in the cost of mortgages.
Wales increased from 16.2 to 16.3 per cent and the East-Midlands from 16.4 per cent to 16.5 per cent.
The Woolwich Mortgage Affordability Research monitors 1.3 million Barclays Group current accounts which have both income and mortgage payment activity on them each month. The scale and diversity of the sample gives a very good representation of mortgage affordability across England Wales.
