Buying home costs 35% of a Londoners' income

Londoners found buying a home became increasingly unaffordable this year, despite historically low interest rates and rising earnings. The capital's house price boom was blamed for increasing the proportion of earnings spent on mortgage payments.

Outside London, the affordability index compiled by Cheltenham & Gloucester and issued yesterday registered a significant fall, and should remain at levels last seen in 1984, before the last dramatic upsurge in the market.

C&G, which is the mortgage arm of Lloyds TSB, calculates that homebuyers in London spend £35 in every £100 on their mortgages this year, compared to £34 in 1998. In the south-east, homebuyers spent £32.50. The national average was £28.50.

However, comparing the state of today's housing market with the 1980s boom is a mistake, the company said.

Despite predictions of rapid house price inflation and rising interest rates, mortage "affordability" is expected to remain stable and significantly different to the levels of 1989 and 1991 when borrowers were paying as much as two-thirds of their salary on mortgage repayments.

Homebuyers in Yorkshire and Humberside spent the least on their mortgage payments, £22 in every £100, while homeowners in the north-west and East Anglia saw affordability improve by £1.70 - more than any other region.