CML: Mortgage burden at five-year low

Homeownership is steadily becoming feasible for a wide number of people thanks to a reduction in the proportion of income needed for new mortgages, new figures show.

According to new data from the Council of Mortgage Lenders (CML), property owners needed less of their income to sort out their mortgage interest than at any time for more than five years.

During the month, property owners needed an average of only 10.6 per cent of their gross income to cover mortgage payments, a reduction from the 11.1 per cent level in October.

By historical standards, this is the lowest debt burden on property owners since the CML started analysing the statistics in 1974, revealed the organisation, which also said those climbing on to the property ladder are benefiting.

First-time buyers only required 14.4 per cent of their gross income in November, down from 15.1 per cent in October, and the lowest level for this group since May 2004.

Commenting on the data, CML director general Michael Coogan said: "It is encouraging to see that mortgage interest payments are so affordable for home movers and first-time buyers.

"But with substantial deposits still needed to secure a mortgage, the market will continue to be relatively restrained for some time to come.

"With refinancing still unattractive or unnecessary for many borrowers due to continuing low rates, we are now seeing a much more house purchase-focussed market, a profile much more like the beginning of the noughties than its latter years."

The month of November also saw 53,000 house purchase loans approved, a four per cent drop on October, although this figure still represents a 66 per cent increase on November 2008.

Remortgaging on the other hand continued to decline as 31,000 loans for this purpose were advanced, representing a six per cent fall on October and a 39 per cent year-on-year reduction.

Meanwhile, Woolwich has announced that it is reducing rates on its tracker product range by up to 0.20 percentage points from today (20th January), its sixth rate reduction in a row.

Borrowers can now obtain lifetime tracker mortgages at up to 70 per cent loan-to-value (LTV) at either 2.63 per cent with a £999 fee applying or at 2.99 per cent without the charge.

Also available from the lender are lifetime trackers at up to 75 per cent LTV at 2.89 per cent, with a £999 fee or 3.19 per cent without the payment.

Andy Gray, head of mortgages at Woolwich said: "In general, tracker mortgages are getting huge amounts of attention because of the low, stable base rate environment over the last year.

"Our new rates in particular are outstanding - they're very competitive, and should prove extremely popular."