This is well below the average of 37% recorded over the past 27 years.
Overall, there was a modest fall in payments relative to earnings over the past year from 29% in 2010 Quarter 4.
Mortgage payments have nearly halved as a proportion of income in recent years from a peak of 48% in 2007 Quarter 3. Lower house prices and reduced mortgage rates have been the main drivers behind the significant improvement in affordability.
The 12 UK regions have all experienced an improvement in affordability since mid 2007. Moreover, affordability is better than the long-term average in all regions. Average mortgage payments as a proportion of average disposable earnings for a new borrower have fallen by two-thirds in Northern Ireland and have nearly halved in both Yorkshire & the Humber and Scotland.
Locally, lower house prices and mortgage rates have resulted in significant improvements in affordability in most local authority districts since 2007. Some 95% of local areas have seen a fall in mortgage payments as a proportion of average earnings of at least 25%. Eighteen areas have recorded an improvement of 50% or more.
A clear north/south divide in affordability exists notwithstanding the improvements experienced in all regions since 2007. Mortgage payments account for the lowest proportion of disposable earnings in Scotland (20%), Yorkshire & the Humber and Northern Ireland (both 21%). Payments are highest in relation to earnings in Greater London (35%) and the South East (33%). The ten most affordable local areas are all in northern Britain while the ten least affordable areas are all in the south.
Martin Ellis, housing economist at Halifax, said: "The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market. Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 1997.
"The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012. This should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households regarding their finances and uncertainty about economic prospects."
Other Key Facts
* The fall in payments relative to earnings from 2011 to 2010 came despite a slight increase between the final two quarters of 2011, moving from 26% in 2011 Quarter 3 to 27% in Quarter 4;
* Seven of the ten most affordable local authority districts are in Scotland. East Ayrshire is the most affordable local authority district in the UK with typical mortgage payments accounting for 15.7% of average local earnings. East Ayrshire is followed closely by West Dunbartonshire and North Ayrshire (both 16.2%);
* Kensington and Chelsea is the least affordable local authority district in the country with average mortgage payments on a new loan accounting for 78% of average local earnings. Brent (54%) and Hammersmith & Fulham (50%) both in Greater London are the next least affordable.
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