Mortgage interest payments are consuming less of borrowers' incomes, as those able to get a mortgage are less stretched financially and are beginning to benefit from reductions in bank rates, data from the Council of Mortgage Lenders (CML) reveals.
The CML highlighted that with lenders tightening their lending criteria, borrowers able to obtain credit are lower risk and less stretched.
There were 12,400 loans to first-time buyers worth £1.4bn in November, compared with 15,400 loans worth £1.8bn in October. The average first-time buyer put down a deposit of 18%, the largest in 35 years of available data. They typically borrowed 3.07 times their income, the lowest level since September 2005.
"Affordability is improving for those who are able to access a mortgage, but saving for a deposit will still be a constraint for many would be first-time buyers," says Michael Coogan, director general of the CML.
He explains: "Borrowers who are benefiting from lower mortgage rates should over-pay if they can afford it to reduce their mortgage balance and protect themselves against falling house prices. And now is also a good opportunity for borrowers on interest-only mortgages to switch to repayment mortgages to use this period of low interest rates to start to pay down their loans."IFAonline
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