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It seems that home affordability for potential first-time buyers has improved significantly over the year as Halifax reveals that first-time buyers are able to afford homes in two out of five areas in the UK.

The bank has found that in 2009, the average price paid by an first-time buyer was affordable for someone on average earnings in nearly four in ten of local authority districts. This is compared to a poor 2007, when only 6% of areas were affordable. In fact, nearly a quarter of local authority areas became affordable between 2008 and 2009.

This is all because the proportion of earnings devoted to mortgage payments by a potential new first-time buyer on national average earnings has almost halved from a peak of 50% in June 2007 to 27% in November 2009 – the current level is below the average over the past 25 years of 34%.

On top of all this, there are signs that mortgage lending criteria has stopped tightening – according to industry-wide figures, the average deposit put down by a first-time buyer has been unchanged as a percentage of the purchase price since early in 2009 following a significant increase in 2008. Also, the number of live mortgage products for first-time buyers has risen by 33% since April, to 1,610 in December 2009.

Martin Ellis, housing economist at Halifax, says: "Housing affordability for potential first-time buyers has improved substantially over the past two years due to the combination of lower house prices and reduced mortgage rates."

Talk to a mortgage expert to find out whether you are eligible for one of the 1,610 first-time buyer loans on the UK mortgage market. You might be surprised to find that you are not only able to find a first-time buyer loan, but able to find a loan that's reasonable and flexible.

SOURCE: Halifax, 03/01/10

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