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Mortgage payments reach 19% of take home pay

07 September 2006
The cost of servicing mortgages in England and Wales increased to 19 per cent of total take home pay in August, the first time it has reached such a level since records began, according to the Woolwich.

Barclays bank's mortgage-lending arm also noted that August's base rate increases would filter through into September figures, so this new high did not even take this into account.

Woolwich first started monitoring mortgage payments as a proportion of take home pay in 2002 and the recent high can be apportioned to a number of factors, remarked Andy Gray, head of mortgages for the Woolwich.

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

"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 steam already seems to be coming out of the market," he added.

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