12 Feb

Affordability 'to ease after rate cuts'

Affordability 'to ease after rate cuts'

Home affordability should be improved in 2008 due to the recent cuts to the base rate of interest by the Bank of England, according to the Council of Mortgage Lenders (CML).

While debt levels for homeowners, including first-time buyers, worsened towards the end of last year, the situation could be about to improve thanks to base rate cuts, the CML said.

In December, first-timers contributed "typically" 20.7 per cent of their incomes to mortgage interest, it noted, up from 17.9 per cent the year before, but the figures do not consider the rate cuts.

Michael Coogan, director general at the CML, claimed that recent developments are great news for consumers.

"Affordability has been stretched further in 2007 but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008," he commented.

He added that the payment shock of those leaving fixed-rate deals will also be lower than the company previously predicted.

Earlier this week, the Department for Communities and Local Government said that there had been a small rise in house prices in December.ADNFCR-1222-ID-18464616-ADNFCR

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