Average homebuyer salary hits four-year low
The study by Mortgage Advice Bureau found that the average salary required by lenders was down 16% in the year to June, falling to £34,584.
The firm said lenders had widened affordability in the last 12 months and are more comfortable lending to those with lower incomes.
A year ago the average primary salary of mortgage applicants was £41,106. This followed the introduction of the Mortgage Market Review (MMR) which placed extra restrictions on mortgage lenders.
During the same period the average deposit size has grown by 6%, rising from £71,474 to reach £75,625.
This has seen the average loan-to-values (LTVs) fall from 69.8% in June 2014 to 69.2% last month, the firm reported.
Brian Murphy, head of lending at Mortgage Advice Bureau, said the current market was much more accommodating for buyers.
“Borrowers have been the winners in the mortgage market over the past twelve months. Although some lenders may initially have been over-cautious following the introduction of the Mortgage Market Review (MMR), a number have since adapted to the rules and become more flexible in terms of affordability,” he said.
“At the same time, mortgage rates have plummeted, leaving borrowers with cheaper monthly bills and making homeownership a more affordable prospect. There are many factors beyond the headline rate that determine whether a loan is suitable, but there is no denying that rate cuts have made a significant difference for many new borrowers.
Murphy added: “However, the Bank of England has indicated that an interest rate rise could be sooner than we first thought. Although lenders thoroughly stress test household finances to ensure borrowers can cope with higher interest rates, a rise of just 0.5% could still bring mortgage bills back up to where they were a year ago. For those who are concerned about the future trajectory of mortgage rates, locking in to a long-term fix is a good way of ensuring stability of repayments.”