Significantly lower interest rates has improved mortgage affordability across the country since the financial crisis according to the Halifax.

The latest research from the Halifax shows the cost of paying for a mortgage as a proportion of disposable earnings has reduced from 47.7% in 2007 to 29.7% on average across the country in 2016.

This has improved 18 percentage points since reaching a peak in 2007 based on new borrowers both first time buyers and home movers and below the long-term average of 35.4% from 1983 to 2013.

Despite average house prices increasing by 7% in the past year, mortgage affordability has remained unchanged at 29.7% in 2015 and 2016.

The Halifax figures show this was due to the fall in mortgage rates reducing from 2.49% to 2.17% during the year.

Mortgage affordability improves in all areas

Since 2007 there has been an improvement in affordability in all local authority districts with mortgage payments falling by 40% as a proportion of earnings in ten areas.

The following table from the Halifax compares mortgage payments as a percentage of disposable earnings in 2007 and 2016.

Region	Payments 2007	Payments 2016
London	55.8%	48.6%
South East	55.8%	41.3%
South West	55.2%	34.3%
West Midlands	47.8%	28.4%
East Anglia	44.0%	28.1%
North West	40.3%	23.9%
East Midlands	44.1%	23.2%
North	43.8%	22.8%
Yorks and the Humber	40.1%	22.8%
Wales	46.6%	22.3%
Northern Ireland	63.5%	20.2%
Scotland	37.3%	19.8%

The most significant improvement has been in Northern Ireland where affordability has improved due to the 40% fall in house prices since 2007.

Martin Ellis, housing economist at Halifax said looking back over the decade there has been a considerable improvement in housing affordability across the country which has been maintained over the past year due to the fall in mortgage rates.

Lower mortgage payments for first time buyers and home movers would provide monthly savings of around £220 in 2016 compared to the monthly cost of £888 in 2007.

Remortgage buyers will also have benefited from the fall in mortgage rates and buy-to-let investors would see the borrowing cost reduce relative to rental income.

Clear north to south mortgage divide

Mortgage payments to earnings are highest in Greater London at 48.6% and is the only region where the percentage is greater than the long-term average of 43.5%.

Other regions in southern Britain have high percentages including the South East is at 41.3% and South West at 34.1%.

For buy-to-let landlords affordability is different as they must have a 25% deposit and show the rental income can exceed 125% of the mortgage interest.

In contrast eight out of ten most affordable regions are in northern Britain with Scotland at only 19.8%, Northern Ireland on 20.2%, North at 22.8% and Yorks and the Humber on 22.8%.

Nine out of ten least affordable areas are all in London including Haringey with mortgage payments to earnings of 68.0%, Brent at 66.1%, Camden on 65.0% and Harrow at 62.9%.

For first time buyers affordability is under control with mortgage payments at 32.0% in 2016 which is a substantial improvement on 2007 when it reached a peak of 50%.

Likewise home movers have also benefited with the percentage at 38%, a significant improvement on 2007 peak accounting for 57% of disposable income.

In contract the older homeowner can access their property wealth with equity release buyers rolling-up interest using a lifetime mortgage to help maintain their standard of living as costs rise.

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