Mortgage payments for new borrowers are at their most affordable level for nearly 15 years as lenders embark on a price war, according to Halifax.
Average mortgage repayments stand at £574.15, making up 26% of earnings after tax, compared with nearly half (48%) of take home pay at £887.62, in mid-2007.
Halifax said this figure was “significantly” below the average of 37% over the past 25 years and at its lowest since 1997.
Buyers are being offered record deals, boosted by the Bank of England's historic low 0.5% base rate, which was maintained yesterday.
Halifax's head of housing economics Martin Ellis said of those looking for a mortgage: “Obviously you have got to be able to raise a deposit, but it is more affordable than it has been.”
He added that people remained cautious due to uncertainty in other areas of their lives, such as their savings and jobs.
“Uncertainties to do with the economy and job prospects are putting a lot of people off buying a home,” he said. “For most people it will be their biggest purchase.”
MoneySupermarket released data earlier this week showing fixed two-year mortgage deals had reached a “record” low.
On Tuesday, Leeds Building Society fuelled the “price war” by launching its lowest ever two-year fixed-rate mortgage at 1.99%, available at up to 75% loan-to-value. This brought the average two-year fixed rate to 3.82%, down from 4.01% in August, the comparison website said.