Interest payments typically consumed 18.2% of a first-time buyer’s income in November, the lowest proportion since February 2007. Home movers in November typically spent 14.4% of their income on interest payments, the lowest proportion since April 2006. The improvement in affordability is largely due to the fact that borrowers who are able to obtain credit are lower risk and less stretched.
There were 12,400 loans to first-time buyers worth £1.4 billion in November, compared with 15,400 loans worth £1.8 billion in October. The average first-time buyer put down a deposit of 18%, the largest it has been in 35 years of available data. And first-time buyers typically borrowed 3.07 times their income, the lowest level since September 2005.
There were 20,600 loans to home movers worth £3 billion, compared with 24,600 loans worth £3.7 billion in October. The average home mover deposit was 32%, the largest since November 2004. Home movers typically borrowed 2.71 times their income.
CML director general, Michael Coogan, said: "Affordability is improving for those who are able to access a mortgage, but saving for a deposit will still be a constraint for many would be first-time buyers. Borrowers who are benefiting from lower mortgage rates should over-pay if they can afford it to reduce their mortgage balance and protect themselves against falling house prices. And now is also a good opportunity for borrowers on interest only mortgages to switch to repayment mortgages to use this period of low interest rates to start to pay down their loans."
