By Daniel Hunter

Mortgage payments for a new borrower are at their lowest as a proportion of disposable earnings for 15 years, according to new Halifax research.

Typical mortgage payments for new borrowers - both first-time buyers and homemovers — at the long-term average loan to value ratio stood at 26% of disposable earnings in the second quarter of 2012.

There has been a continued fall in payments relative to earnings over the past year from 29% in Q2 2011, taking this measure further below the long-term average of 36%1.

Overall, mortgage payments have nearly halved as a proportion of income over the past five years from a peak of 48% in Q3 2007.

"Lower house prices and reduced mortgage rates have led to a significant improvement in housing affordability for those able to fund the necessary deposit to enter the market over the past five years," Martin Ellis, housing economist at Halifax, commented.

"As a result, mortgage payments for a typical new borrower currently account for the lowest proportion of earnings for 15 years.

"The relatively low level of mortgage payments in relation to income is providing support for house prices. The prospect of interest rates remaining at low levels for sometime yet is expected to continue to be a key factor supporting the demand for homes, helping to keep house prices around their current level during the remainder of 2012."

Affordability is better than the long-term average in all regions. Each of the 12 UK regions has seen a marked improvement in affordability since mid 2007. Average mortgage payments as a proportion of average disposable earnings for a new borrower have fallen most - by two-thirds - in Northern Ireland and have nearly halved in Wales, Yorkshire & the Humber and Scotland.

There have been significant improvements in affordability in most local authority districts since 2007. 98% of local areas have seen a fall in mortgage payments as a proportion of average earnings of at 25% or more. 37 areas - nearly 10% of the total surveyed — have recorded an improvement of at least 50%.

Nonetheless, a clear north / south divide in affordability persists with affordability better in the north. Mortgage payments account for the lowest proportion of disposable earnings in Scotland and Northern Ireland both (20%) followed by Yorkshire & the Humber (21%). Payments are highest in relation to earnings in Greater London (35%), the South East (32%) and the South West (32%).

The ten most affordable local authority districts are all in Scotland. East Ayrshire is the most affordable local authority district in the UK with typical mortgage payments accounting for 15.0% of average local earnings. East Ayrshire is followed by West Dunbartonshire (16.1%) and North Ayrshire (16.2%).

The ten least affordable local areas are all in southern England. Kensington and Chelsea is the least affordable local authority district in the country with average mortgage payments on a new loan accounting for 77% of average local earnings. The London boroughs of Brent (52%) and Hammersmith & Fulham (51%) are the next least affordable.

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