Following a review of its mortgage completion data so far this year, the Council of Mortgage lenders (CML) as stated that affordability indicators have eased for house purchase loans.
The April data, showed first-time buyers typically took-out loans for 3.3 times their income, down from 3.35 times income in March and the lowest level since November 2006. The average home mover loan was 2.96 times income, down from three times income in March 2008 and the lowest level since July 2006. The proportion of income typically spent on mortgage interest payments by first-time buyers also fell to 19.6 per cent, from a high of 20.7 per cent in December 2007.
However, this does not necessarily indicate that affordability improved in April for new mortgages. Rather it demonstrates how the profile of borrowers has changed as a result of the credit crunch. These figures also support the view that, the majority of first-time buyers in the UK have not been dissuaded from climbing on to the property ladder. Although some buyer’s perceptions of affordability may be unrealistic, competitive prices are still achievable and the recent cooling of prices has increased accessibility.
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