Typical mortgage payments for a new borrower in Scotland - both first-time buyers and homemovers - at the long-term average loan to value ratio stood at 20% of disposable earnings in the fourth quarter of 2011. This is well below the average of 30% recorded over the past 27 years.
Overall, there was a modest fall in payments relative to earnings over the past year from 21% in 2010 Quarter 4.
Mortgage payments by Scottish homeowners have nearly halved as a proportion of income in recent years from a peak of 38% in 2007 Quarter 4. Lower house prices and reduced mortgage rates have been the main drivers behind the significant improvement in affordability.
Mortgage payments account for the lowest proportion of disposable earnings in Scotland (20%). This compares with the UK average of 27%.
Seven of the ten most affordable local authority districts in the UK are in Scotland. East Ayrshire is the most affordable local authority district in the UK with typical mortgage payments accounting for 15.7% of average local earnings. East Ayrshire is followed closely by West Dunbartonshire and North Ayrshire (both 16.2%).
Nitesh Patel, housing economist at Bank of Scotland, commented: "Mortgage payments in Scotland account for only a fifth of disposable earnings, compared to over a quarter for the UK as a whole. Scotland has seven of the ten most affordable local authority districts, with East Ayrshire the most affordable with mortgage payments accounting for 15.7% of average local earnings.
"The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market. Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 2002.
"The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012.
“This should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households regarding their finances and uncertainty about economic prospects."
