U.K. Mortgage Affordability Scores High in West
- 27th October 2010
- Buying Property News
Survey finds that house prices in relation to earnings bears no effect on mortgage affordability.
A recent Capital Economics survey compared the mortgage affordability of the U.K. with other Western economies. The United Kingdom competes well with other countries - surprising given the doom and gloom frequently reported in the press. The U.K. ranks fifth in the list, above Denmark, France, the Netherlands, and Sweden.
Paul Diggle, author of the report, said that he was surprised with the results as the U.K. has a high density population and is reported to have an undersupply of housing. He explained that this would typically lead to a higher percentage of earnings spent on mortgages, yet the report did not show this to be the case.
The report calculated the average new repayment mortgage over the past 40 years to be 48% of take-home pay. In the U.K. it is only just above this average at 50%.
The most important factor of mortgage affordability was found to be mortgage interest rates, which, Diggle explains, undermines "the popular view that a chronic undersupply of homes in the UK supports high prices".
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