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UK Nov mortgage affordability
Tuesday, January 8, 2008
LONDON (Thomson Financial) - Mortgage affordability improved slightly in the UK in November, resisting the impact of fraught credit market conditions, the Council of Mortgage Lenders (CML) said.
First-time buyers in November typically borrowed 3.33 times their income, continuing a gentle decline in the autumn since the peak of 3.39 in August, the CML said.
Home movers typically borrowed 3.02 times their income, a figure that has been steady since August's peak of 3.04.
The CML confirmed gross mortgage volumes in November were 30 bln stg, down from 33.5 bln in October.
"At a time of global market uncertainty, business levels in the mortgage market are holding up reasonably well in the UK despite funding constraints," said Michael Coogan, CML director general.
He highlighted the importance of the Bank of England's (BoE) interest rate decision this week on homeowner confidence, but said lenders will not automatically match the base rate with their own mortgage rates.
"Each lender will make its own commercial decision on whether to change its standard variable rate to follow a base rate move, depending on its risk profile, cost of funds, and business focus," he said.
Borrowers on fixed-rate mortgages will be unaffected for now by any changes in the base rate, but the CML noted households are now tending towards variable-rate mortgages rather than fixed-rate, as they anticipate further BoE cuts.
The proportion of borrowers taking out fixed-rate mortgages fell for the fifth successive month in November, to 65 pct, down from a peak of 77 pct in June.
