Mortgage payments up to a fifth of income, says Woolwich

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Mortgage payments up to a fifth of income, says Woolwich

Thu 7th Sep 2006

While it is quite enjoyable to fork over a large chunk of your earnings to stay in a luxury hotel, spending almost one fifth of your yearly income on mortgage repayments is not quite as attractive.

Woolwich's mortgage affordability research shows that 2006 has seen most home owners handing over 19 per cent of their annual income to pay their mortgage.

Head of mortgages at Woolwich, Andy Gray, says that while it is an undesirable situation, there are legitimate reasons behind it.

"Increasing house prices, a buoyant summer market and the hight cost of fixed rates are having an impact on affordability," he said.

"With the increase in base rates in August yet to filter through the cost of borrowing still has some way to go and it will become increasingly questionable whether another increase in interest rates is needed as the stream already seems to be coming out of the market."

Through its research, Woolwich has highlighted the priciest places in Britain to live.

In London, Holborn and St Pancras residents spent on average 31.2 per cent of the household income on mortgages, the highest in the country.

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