Mortgage payments ‘more affordable’

New borrowers are enjoying the most affordable level of mortgage repayments for nearly 15 years due to a lenders' price war, new research has found.

According to Halifax, average monthly mortgage repayments stand at £574.15, 26% of earnings after tax. This compares to 48% of take home pay in mid 2007, and an average of 37% over the past 25 years.

With the Bank of England holding firm on its historic low 0.5% base rate, buyers are being offered record deals in order to keep the market afloat. But there are still issues blighting first time buyers according to Halifax.

"Obviously you have got to be able to raise a deposit but it is more affordable than it's been for a long time," said Halifax's Head of Housing Economics, Martin Ellis.

"Meanwhile, uncertainties to do with the economy and job prospects are putting a lot of people off buying a home. For most people it will be their biggest single purchase."

Despite this, Halifax's findings were echoed by research from Moneyfacts this month, which reported that the average two-year fixed 90% loan-to-value (LTV) mortgage rate had fallen to its lowest point since January 2008 to 5.39%, down from 5.97% a year ago.

"Substantial rate reductions in the higher loan-to-value market will be encouraging news for borrowers," said Moneyfacts spokeswoman Louise Holmes.

"Lenders have begun to launch more competitive products to borrowers who during the height of the credit crisis had pretty much given up on the prospect of owning their own property."