The Mortgage Advice Bureau has said that the average salary of buyers seeking a mortgage has fallen to a near-four year low in June.
Last year, the average main salary of mortgage applicants peaked at £41,106 following the introduction of the Mortgage Market Review prior that week.
In contrast, the typical primary income for a borrower in June 2015 was £34,584, this is an annual fall of 16 % and the lowest figure seen since August 2011.
This arises despite a six % increase in the size of the average purchase deposit since June 2014. Purchase applicants put forward an average deposit of £75,625 in June 2015, an increase from £71,474 year-on-year.
This results in an average loan-to-value falling slightly from 69.8 % in June 2014 to 69.2 % last month, as buyers borrow less in relative terms and carry more of the cost of their purchase themselves.
Nevertheless, the typical purchase deposit represented 1.74 times the average buyer’s primary salary in June 2014 – this has since increased to 2.19 times salary.
The Mortgage advice Bureau say that following an endorsement from the Bank of England’s Financial Policy Committee, household finances are already being stress tested against a 3.0 % base rate hike when applying for a mortgage.