Scotland Housing Setting the Standard for Affordability Within the UK
Scotland housing has achieved affordability not seen in some time, as the last four years of decline in mortgage costs has created an attractive region of housing. The amount of disposable earnings now being spent on a home loan in Scotland averages less than 25%. Just 4 years ago, the Bank of Scotland research confirms more than 35% of disposable earnings were used toward home loans.
Now, mortgage payments, as a percentage, account for less of average earnings in Scotland compared with anywhere else in the UK. It is quite different for residents of London and the Southeast of England. Homeowners are typically spending more than 35% of their monthly income on the monthly mortgage payment.
Martin Ellis, housing economist at Bank of Scotland, commented on how mortgage affordability has increased since the financial crisis in 2007, saying: "Lower house prices and reduced mortgage rates have resulted in a substantial improvement in housing affordability since the peak of the housing market in 2007. Mortgage payments for a typical new borrower as a proportion of average earnings are now broadly in line with levels last seen in 2003 and are comfortably below the long-term average."
Ellis added: "With the prospect of continuing low rates for some time yet, affordability is likely to remain favourable. These affordability gains, together with a slowly improving economy, should help support demand in the face of pressures from weak earnings growth, relatively high inflation and higher taxes."