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Home Buyer Debt Burden At Record Low

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The Council of Mortgage Lenders has released new data showing mortgage loans have increased by 67% over the past year.  The figures also show the percentage of income spent on mortgage interest payments is almost 4% lower than twelve months ago and the lowest it has been in thirteen-and-a-half years.

On average, home owners needed only 10.6% of gross income to cover mortgage interest payments in November 2009, down from 11.1% in October. Other than a brief low of 10.2% in the middle of 1996, this is the lowest debt burden on home movers since the Council of Mortgage Lenders started recording this data in 1974.

The debt burden on first time buyers also reduced, with 14.4% of gross income needed in November, down from 15.1% in October - the lowest it has been since May 2004.

But reports the proportion of home buyers who are purchasing a house for the first time has dropped to its lowest level since November 2008.  It cites latest figures from the National Association of Estate Agents showing first time buyers accounted for 19% of agreed sales in November 2009, down from 45% May 2009.

Council of Mortgage Lenders director-general Michael Coogan had this to say:

"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."

Table 1: Home movers, lending and affordability

Number of loans

Value of loans (£m)

Average
loan to value

% of
income spent on 
interest payments

November 2009

33,600

5,000

67%

10.6%

Change from October 2009

-5%

+4%

66%

11.1%

Change from November 2008

+67%

+67%

70%

14.4%

 

Table 2: First time buyers, lending and affordability

Number of loans

Value of loans (£m)

Average
loan to value

% of
income spent on 
interest payments

November 2009

19,300

2,200

75%

14.4%

Change from October 2009

-2%

 -

75%

15.1%

Change from November 2008

+62%

+69%

83%

18.2%

 

Table 3: Loans for house purchase (HP) and remortgage (REM)

 

Number of HP loans

Value of HP loans (£m)

Number of REM loans

Value of REM loans (£m)

November 2009

53,000

7,200

31,000

3,700

Change from October 2009

-4%

-3%

-6%

-8%

Change from November 2008

+66%

+64%

-39%

-46%

 

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