BBC News Online: Business

UK houses affordable says bank

Affordability protects the housing market from recession

Recent sharp falls in interest rates, along with rising incomes, have pushed down the percentage spent to service a mortgage.

"The average first time UK buyer paid 14.1% of income on mortgage payments in the third quarter of 2001 compared with 15.6% in 2000 and almost 19% a decade ago," said Abbey National chief economist Barry Naisbitt.

Interest rates to rise

Properties are expected to become less affordable because interest rates are set to bounce back over the next year, Abbey National said.

Though for the next three months, the bank predicted that rates would fall further and this should help boost the property market.

"For the housing market these indicators of affordability point to sturdy underpinnings for the year ahead which should help to protect the housing market from the worries about global recession," said Mr Naisbitt.

Regional variations

In the South East, the percentage has fallen to 14.9% from 20.1% a decade earlier.

East Anglia saw a fall to 13.5% from 19.3%, while Northern Ireland and Scotland saw only small changes in affordability.