Average mortgage payments increase 15 per cent

Average mortgage payments in England and Wales reached £590 in April 2007, an increase of £78 a month on the same month in 2006 (£512 in April 2006) or equivalent to 15 per cent rise in costs over the year, according to the latest Woolwich Mortgage Affordability Research.

Over the same time period household net earnings have increased by only 5 per cent.
The average household is now spending 19.9 per cent of their take home pay on their mortgage payments, the highest figure since Woolwich started recording the data in January 2002 when the average spend on mortgages was 15.9 per cent, and it is expected to rise above 20 per cent for the first time in May 2007.

Andy Gray, head of Woolwich Mortgages, said: “Mortgage borrowers are really getting squeezed. With the costs of council tax, petrol, food and drink, as well as mortgages, all increasing consumers are seeing a large amount of their earnings being diverted to essentials, putting real pressure on disposable income.”

“Most commentators are suggesting that interest rates will increase further this week . However, our research shows that that the three interest rate increases over the last 12 months are already starting to have a major impact on borrowers.”

Across the country borrowers in the West Midlands have seen their mortgage payments increase by 18 per cent over the last year, closely followed by those in the North West who have seen costs go up 17 per cent. London, which is currently experiencing relatively fast growth in house prices, has seen a lower increase of 13 per cent.

The Woolwich Mortgage Affordability Research monitors 1.3 million Barclays Group current accounts which have both income and mortgage payment activity on them each month. The scale and diversity of the sample gives a very good representation of mortgage affordability across England Wales.