Home Loan Accounting for Lowest Level of Income in 5 Years

Fri, 15 Jan 2010

New figures from the Council of Mortgage Lenders (CML) have revealed that British consumers are spending the lowest amount of their income on home loan repayments in five years. November 2009 saw first time buyers and home movers spend just 12 per cent of their gross income on home loans, compared with 11.6 per cent in January 2004.

Home movers continue to benefit from the numerous interest rate reductions from the Bank of England, with the knock on effects contributing to a further half per cent deduction in the portion of their income used to pay off mortgages . Home movers use just 10.6 per cent of their income to repay mortgages – the second lowest figure since records began in 1974.

The overall debt burden on first time buyers also continues to fall, and stood at 14.4 per cent in November. The figure accounts for other forms of debt such as personal loans, payday loans, and credit card debt, and is at its lowest level since May 2004.

Despite the positive picture, director general of the CML, Michael Coogan, said that the hefty deposits still required would mean that the property market would remain constricted for some time.
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