UK Mortgage payments for new borrowers are at their most affordable level for nearly 15 years as lenders embark on a price war, according to Halifax.

Average mortgage repayments stand at £574.15 (€663.81), making up 26 per cent of earnings after tax, compared with nearly half (48 per cent) of take home pay at £887.62, in mid-2007.

Halifax said this figure was “significantly” below the average of 37 per cent over the past 25 years and at its lowest since 1997.

Buyers are being offered record deals, boosted by the Bank of England’s historic low 0.5 per cent base rate, which was maintained last Thursday.

Halifax’s head of housing economics Martin Ellis said of those looking for a mortgage: “Obviously you have got to be able to raise a deposit but it is more affordable than it’s been for a long time.”

He added that people remained cautious due to uncertainty in other areas of their lives, such as their savings and jobs.

“Uncertainties to do with the economy and job prospects are putting a lot of people off buying a home,” he said. “For most people it will be their biggest single purchase.”

Moneyfacts also reported last Thursday that the average two-year fixed 90 per cent loan-to-value (LTV) mortgage rate had fallen to its lowest point since January 2008.

The average two-year 90 per cent fixed mortgage rate is now 5.39 per cent, down from 5.97 per cent a year ago.

Meanwhile, the typical rate for a five-year fixed deal at 90 per cent LTV stands at 5.87 per cent, down from 6.66 per cent in 2010.

The website’s spokeswoman Louise Holmes said: “Substantial rate reductions in the higher loan-to-value market will be encouraging news for borrowers.

“The availability of higher loan-to-value mortgage products has increased over the past couple of years.

“Lenders have begun to launch more competitive products to borrowers who during the height of the credit crisis had pretty much given up on the prospect of owning their own property.”

Money Supermarket released data earlier last week showing fixed two-year mortgage deals had reached a “record” low.

Last Tuesday, Leeds Building Society fuelled the “price war”, by launching its lowest ever two-year fixed-rate mortgage, at 1.99 per cent, available at up to 75 per cent loan-to-value.

This brought the average two-year fixed rate to 3.82 per cent, down from 4.01 per cent in August, the comparison website said.

Figures released last week showed that the number of mortgage approvals for house purchases climbed to a 20-month high in August, as borrowers took advantage of the raft of rate cuts.

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