The Council of Mortgage Lenders (CML) has announced that mortgages are currently at their all-time most affordable rate, according to a BBC article from November 2016.
The average first-time buyer in September 2016 spent only 17.7% of their monthly earnings on mortgage repayments. This compares to 2008 when, due to high interest rates, the average mortgage repayments was 23.7% of monthly income.
The CML announced that its latest figures mean that more people can now afford to purchase a home. Many lenders have lowered their mortgage interest rates following the Bank of England’s cut in its base rate to 0.25%.
There are now some mortgages available at interest rates as low as 0.99% on a two-year fixed rate. Many commercial mortgages for buy-to-let properties are also available at low interest rates.
Paul Smee, the director of the CML said:
“Mortgage affordability reached an historic low in September, for both first-time buyers and home movers, which partly reflects the repricing of mortgages following August’s base rate cut.”
He added that the strong dream of being a homeowner is now a reality for more first-time buyers.
The total value of mortgages has risen, but this is mainly due to the increase in house prices, which, according to figures released by the Office of National Statistics, rose by 7.7% in September 2016.
Following the recent United States election, the bank swap rate, which affects mortgage lenders interest rates, has increased. This means that mortgages could soon increase by around 0.25% but should still remain low.