Housing Affordability
Average mortgage advance as % of dwelling price, 1997-2007
This graph shows the UK average mortgage advance as a proportion of overall dwelling prices from 1991-2007. The advance is the average percentage of funds provided to individuals for their household mortgage by a lending institution.
This ratio highlights the stability in the proportion of advance to dwelling price for moving owner-occupiers which hovered between 60% and 65% over the period.
The proportion for first-time buyers by contrast has fluctuated from a high of 90% in 1996 to a low of 76% in 2003.
By 2007, mortgage advances formed over 80% of dwelling prices for first time buyers compared to just over 60% for moving owner occupiers.
Source: UK Housing Review, 2008: 136-7
Average mortgage advance compared to average household income, 1991-2007
This graph shows the UK average mortgage advance compared to average household income from 1991-2007, which is a measure of housing affordability. The advance is the average percentage of funds lent to people for their household mortgage by a lending institution.
It shows that the average mortgage advance has always been more than twice the level of average household incomes, except for a brief period in 1995 and 1996 when it dropped below this.
It demonstrates how first-time buyers always bear a higher mortgage advance relative to moving owner-occupiers in the UK and that the gap widened during the mid-1990s and then narrowed in 2000.
This gap has gradually widened again over the 2000s and in 2004 saw the ratio of advance to income exceed 3:1 for first-time buyers, a picture that continued in 2007, suggesting major housing affordability problems.
Source: UK Housing Review, 2008: 136-7
Repossessions and arrears, 1991-2007
This graph notes the number of home repossessions during the year and the number of mortgages with over six months' arrears, which is useful for examining how sustainable it is for individuals to remain as owner-occupiers.
Some of those in long-term arrears may face repossession of their home by mortgage lenders.
There was a decline in the number of repossessions from 75,540 cases in 1991 to only 8,200 cases in 2004 across the UK. However, repossessions began increasing in 2005.
Similarly, the pattern of mortgage arrears declined from its peak of 352,000 in 1992 to 40,900 in 2004. However, this number has increased again since 2004.
Source: UK Housing Review, 2008: 147
Buy-to-let loans, 1999-2007
This graph shows both the number of new lending cases for buy to let and the average value of new buy-to-let loans from 1999 to 2007.
The rising housing market since the 1990s has made housing an attractive investment option and the buy-to-let market has been particularly buoyant, causing both the number of cases and their value to rise steadily since 1999.
The number of new lending cases rose from 44,400 cases in 1999 to 346,000 new cases in 2007, while the average value of buy-to-let loans has also increased from £70,000 in 1999 to £128,500 in 2007.
There is considerable uncertainty, however, about how the activities of buy-to-let landlords will affect the housing market as it recovers from the current recession.
Source: UK Housing Review, 2008: 153