Mortgage payments for a new borrower in the second half of 2011 were at their lowest level as a proportion of disposable earnings for 14 years, according to new Halifax research. Typical mortgage payments for a new borrower - both first-time buyers and homemovers – at the long-term average loan to value ratio stood at 27% of disposable earnings in the fourth quarter of 2011. This ratio is well below the average of 37% recorded over the past 27 years.

Overall, there was a modest fall in payments relative to earnings over the past year from 29% in 2010 Quarter 4 as mortgage payments have nearly halved as a proportion of income in recent years from a peak of 48% recorded in 2007 Quarter 3. Lower house prices and reduced mortgage rates have been the main drivers behind the significant improvement in affordability.

All 12 UK regions have experienced an improvement in buyer affordability since mid 2007 and is better than the long-term average in all regions. Average mortgage payments as a proportion of average disposable earnings for a new borrower have fallen by two-thirds in Northern Ireland and have nearly halved in both Yorkshire & the Humber and Scotland.

Locally, lower house prices and mortgage rates have resulted in significant improvements in affordability in most local authority districts since 2007. 95% of local areas have seen a fall in mortgage payments as a proportion of average earnings of at least 25%. Eighteen areas have recorded an improvement of 50% or more.

However a clear North v South divide in affordability exists, notwithstanding the improvements experienced in all regions since 2007. Mortgage payments account for the lowest proportion of disposable earnings in Scotland (20%), Yorkshire & the Humber and Northern Ireland (both 21%). Payments are highest in relation to earnings in Greater London (35%) and the South East (33%). The ten most affordable local areas are all in northern Britain whilst the ten least affordable areas are all in the south.

Commenting on their research Martin Ellis, housing economist at Halifax said: "The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market. Mortgage payments for a typical new borrower are now at their lowest in proportion to earnings since 1997.

"The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012. This should support the market over the coming 12 months, helping to offset the impact of the downward pressures on demand from the ongoing difficulties faced by households regarding their finances and uncertainty about economic prospects."