Mortgages payments to earnings ratio in the UK declines

The cost of repaying a mortgage as a percentage of income hit its lowest level in 25 years, according to a report by Halifax.

The report showed that in June 2010, the average person was using 28 percent of their disposable income to pay back their mortgages, substantially lower than that in June 2007 where average buyers used 50 percent of their earnings to pay their mortgage obligations.

The amount was also far less than the payments to earnings ratio seen in the past 25 years, where 35 percent was recorded as the average rate.

“We believe it's important that first-time buyers understand that while there are still challenges in raising deposits, other market conditions are more positive,” said Stephen Noakes, commercial director for mortgages.

The report was released following the Council of Mortgage Lenders’ findings that the total amount of money loaned in July rose 5 percent to £13.6 billion compared with the previous month.