Mortgages have never been cheaper - except if you live in Camden

Mortgage payments for new borrowers are at their most affordable in 14 years owing to lenders slashing their rates and the falls in house prices. Camden, however, was named as the least affordable district in the UK, while East Ayrshire in Scotland and Omagh in Northern Ireland were deemed the most affordable

Mortgage payments for new borrowers are at their most affordable in 14 years after a price war erupted between lenders, a report found today.

Lenders slashing their mortgage rates, along with house prices having fallen in recent years, were said to be the main factors behind improved affordability.

The findings for a potential new borrower entering the market are well below the average 36 per cent share of mortgage payments recorded as a proportion of income which has been seen over the past 30 years. Mortgage payments reached a peak of 48 per cent of income in 2007.

On a regional basis, mortgage payments were found to be lowest as a proportion of income in Northern Ireland, which has seen sharp falls in house prices following the market crash. Payments there for a new borrower made up just 17 per cent of income.

Mortgage payments were also found to be particularly low in relation to earnings in Scotland, where the figure was 19 per cent, while in Yorkshire and the Humber it was 22 per cent and in the North West it was 23 per cent.

Payments in relation to earnings are highest in London at 36 per cent, the South-East at 34 per cent and the South West at 32 per cent. They were found to be in line with the average in Wales, at 27 per cent.

On a local level, Camden in north London was named as the least affordable district in the UK, with mortgage payments there costing 53 per cent of income. East Ayrshire in Scotland and Omagh in Northern Ireland were the most affordable, with mortgage payments in both areas costing just 14.7 per cent of earnings.

A government scheme called Funding for Lending was launched a year ago, which prompted a flurry of lenders to slash their mortgage rates to some of their lowest ever levels.

However, some of these rates also come with hefty fees, which borrowers need to take into account when working out the best deal. The scheme gives lenders access to cheap finance in order that they pass the benefits on to borrowers.