MORTGAGE affordability hit its worst level since the early 1990s in October, according to fresh figures from the Council of Mortgage Lenders (CML).
The trade body revealed that in October first-time buyers spent 20.6 per cent of their income on mortgage
interest, up from 20.4 per cent in September and the highest level since 1991.
Meanwhile, home movers used up 17.6 per cent of their income on interest, an increase from 17.5 per cent in September and the highest level since 1992.
In October, the proportion of new mortgages that were fixed-rate deals fell to 68 per cent from 72 per cent the previous month. The CML said the trend towards variable rate loans may increase as the expectation of further interest rate cuts lessens the need to lock in a guaranteed rate.
Lending volumes remained strong in October, totalling £33.5 billion, a 9 per cent rise from £30.6bn a year ago. But most of these loans are likely to have been approved before the full impact of the credit crunch and the Northern Rock debacle.
CML director general Michael Coogan said: "October is the last month we expect lending volumes to be higher than a year ago as lenders and borrowers will behave more cautiously in an uncertain and slowing market."
The latest figures were released as the CML met Conservative leader David Cameron and shadow chancellor George Osborne. The CML urged the Tories to consider policies to improve the "woefully inadequate level of state support that currently applies to homeowners". It argued this would help redress the "policy mistake" of 1995 when income support for mortgage interest payments was severely cut back under the Tory government of the time.
The industry body also hit out at Citizens Advice's new report, Set up to Fail, branding it as too simplistic in its criticisms of the lending industry.
On launching the report, Citizens Advice chief executive David Harker said: "The cavalier behaviour of some brokers and subprime lenders is seriously undermining home ownership and hitting the most vulnerable borrowers hardest."
The CML responded that most mortgage customers received help if they fell into difficulties.
