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Mortgage affordability best for 10 years but be wary says Barclays

By Jonathan Dawes, Mon 28 Feb 2011 - Published in Money

Research by Barclays has suggested that mortgage affordability has hit its best level for ten years but warned homeowners to look ahead and be prepared for any increase in their payments.

Andy Gray, head of mortgages at Barclays, said: "With interest rates at an historic low, mortgage affordability is at its best in a decade, but it is crucial that homeowners are not complacent."

The report focussed on more than one million customer accounts and found that on average people paid out 15.4 per cent of their take home pay to cover their monthly mortgage, the lowest level in ten years of analysis.

After polling over 1,000 homeowners, Barclays also found that 13 per cent of people are comfortable with their mortgage repayments and are not worried if interest rates rise.

However, 28 per cent of households said they would be stretched but had enough money to deal with rates rising.

Recently, Ray Boulger, senior technical manager at John Charcol, an independent mortgage adviser said: "The longer interest rates stay very low and the more people get used to low interest rates, the more of a shock it will become when they do start to go up if they go up too quickly."

Mr Gray also acknowledged that other financial factors will play a part in 2011, with rising energy bills and petrol costs but added it is now a golden opportunity to ensure that plans are made to safeguard mortgage repayments for this year and beyond.