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Mortgage affordability improves in March

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Mortgage affordability improved as the average salary of a new mortgage borrower hit a two year low in March.

Figures from broker firm Mortgage Advice Bureau said the average salary of a purchase applicant was £38,159 in the month.

This is the lowest level recorded to November 2012 and was 2.9% lower than the previous month.

The average deposit was down by 3.2% between February and March, falling to £68,877 from its previous level of £71,169.

This was despite the average UK house prices growing 0.4% in the same period. The firm suggested banks were now more open to lending to borrowers with smaller deposits.

Mortgage applications were also on the rise, growing 18% on the previous month. Breaking the data down further, purchase applications rose by 16% while remortgage applications were up 21%.

Brian Murphy, head of mortgage lending at Mortgage Advice Bureau, said borrowers were finally coming back to the market following months of stagnation since the turn of the year.

“Record low mortgage rates have been hitting the headlines for several months now, but affordability has been improving in other areas too, with improved access to mortgage finance for lower income borrowers,” he said.

“House price growth has moderated in 2015 so far, and average loan-to-values are slowly creeping up, making deposit requirements less strenuous.

“A rise in average LTVs is always welcome for borrowers. Not so long ago, 90% mortgages were seen as a normal part of a healthy, functioning market. It doesn’t mean that consumers are borrowing beyond their means because safeguards are in place to prevent this and all applicants are thoroughly stress-tested before their mortgage is approved.

“The seasonal slowdown in mortgage activity appears to be behind us as both purchase and remortgage applicants were out in force in March – despite speculation that pre-election jitters could dampen the housing market.”

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