New homeowners now need just over a quarter of take-home pay to meet mortgage payments, marking a 15-year high in mortgage affordability.
The findings from a Halifax report revealed that weak house prices and a fall in interest rates to a record low may have been the catalyst for homeowners needing the lowest proportion of disposable earnings to meet home loan payments since 1997.
Interest rates currently stand at 0.5%, which Halifax argues will help to stabilise house prices throughout the remainder of 2012. Despite the positive outlook for those keen to get a foothold on the property ladder, recent research has also highlighted the fact that mortgage approvals are at a 15-year low.
Mortgage payments as a proportion of income is said to have dropped by nearly a half, compared to the peak of 48% recorded in autumn 2007.
An improvement in housing affordability, particularly in Northern Ireland, has been recorded in every UK nation or region over the last five years according to the report.
However, Henry Pryor, an independent housing expert, argues that the figures assume that homeowners are putting down a deposit of 30% – the long-term average taking into account remortgaging – which is still unachievable for many first-time buyers.
Speaking to the BBC, he said: “Out in the real world, the biggest drag on the buying and selling process is that people are having to scrape together a year’s worth of after-tax pay for an acceptable deposit.”