Mortgages more affordable, reports London Mortgage Broker N5 Wednesday, 10th March 2010

According to property website Zoopla, mortgages now more affordable than at any time since in 2003.

UK housing affordability at its highest level since 2003,as research released today reveals falls in house prices and mortgage rates over the past couple of years.

The current levels were last seen in 2003 when the affordability rate was 56%, leaving UK property more affordable now than at any time in the past 7 years according to the Zoopla research. The average UK income earner can now afford to buy 58% of all homes, up significantly in comparison to the property market peak in 2007 when just 34% of homes were affordable. Over the past 10 years, affordability levels reached their highest point in 2002 at 66% and then fell steadily over the next 5 years.

In 2002 using one third of income to meet mortgage repayments allowed a purchase of £118,934 whereas today, given the current low financing costs and increased incomes, the same proportion of income finances a purchase of £188,423.Zoopla has calculated the affordability rate using median incomes and average house prices in each geographic area along with prevailing mortgage rates. It judges a home to be ‘affordable’ if one third of the median income is sufficient to cover mortgage repayments.

“Affordability rates have improved substantially over the past couple of years as a result of lower mortgage rates and falling house prices that have now begun to stabilise. We are at levels of affordability not seen in the UK housing market for almost seven years which makes it a great time to buy, especially if current low interest rates can be locked in by the borrower.” Nicholas Leeming, commercial director of Zoopla.co.uk, commented.

Across the UK, affordability rates vary greatly by area with the most affordable markets generally in the north and the least affordable in the south, despite the higher income levels.