Mortgage Accounting for Lowest Percentage of Income in Thirty Years
According to new data from the Council of Mortgage Lenders, homeowners saw their mortgage interest payments accounting for the lowest percentage of their income since 1975. They might be paying less of this income to service their mortgage, but it doesn’t mean that borrowing is just as expensive as it has been.
One lender said: "In large part it simply reflects the fact that lenders will only offer low LTV ratios, meaning those borrowers today have less equity (and would therefore need bigger mortgage and spend more of their income servicing them) are frozen out of the market." Another lender expanded saying: "The availability of mortgage finance remains at dramatically reduced levels, and activity in the property market is subdued as a result. Lenders are under extreme pressure to increase the mortgage funding on offer. However, the banks now face a hugely difficult balancing act in trying to meet the conflicting demands placed on them. In addition to offering more home loans to borrowers, the banks must refinance the money borrowed from special liquidity measures and wean themselves off government support at the same time." Popular opinion of the current climate and lending is overwhelming. That opinion says that government must support lenders but at the same time provide conditions optimal for continued availability of funds and growth. First time buyers is well as those seeking a remortgage will benefit.