FTB mortgage affordability hits 12 year high.

29 December 2010 0:00 am | Updated: 29 December 2010 2:08 pm | By Chris Salih

Mortgage affordability for first time buyers is at its most attractive for 12 years, according to the latest annual Halifax First Time Buyer Review.

According to the survey, the average proportion of disposable earnings devoted to mortgage payments by potential first time buyers stood at 27 per cent in September 2010, the lowest level since December 1998 and almost half the 50 per cent in September 2007.

Halifax says this is down to a mixture of lower house prices in the past three years and declining mortgage rates.

The survey also found that 40 per cent of local authority districts across the UK were now classed as “affordable” to the first time buyer in 2010, this contrasts to just 6 per cent in 2007 but still falls way short of the 82 per cent seen in 2000.

Only 5 per cent of first time buyers paid stamp duty between April and November 2010 as a result of the temporary increase in the stamp duty threshold for FTBs from £125,000 to £250,000 announced in March.

Halifax housing economist Martin Ellis says: “The ’noughties’ were a difficult period for many looking to get onto the property ladder. The substantial rise in house prices over much of the decade prevented many potential first time buyers from entering the market, however, affordability has improved significantly over the past three years.

“Whilst the tightening in lending criteria experienced across the mortgage industry since the onset of the credit crunch in 2007 deterred first-buyers from trying to secure mortgage finance, there are now encouraging signs of a modest improvement in mortgage availability.”

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