Interest rates left unchanged at 4.75%

6 September 2006

The cost of meeting mortgage repayments across England and Wales increased to £546 – or 19% of household take-home pay in August – according to the Woolwich.

These figures don’t include the increased costs imposed by August’s interest rates increase, which will filter through to mortgage payments in September.

The Woolwich said the increase in costs – up from 18.8% in July 2006 – could be attributed to a number of factors. Both higher rates for fixed rate mortgages and the buoyant property market are to blame, it said.

According to the lender, all areas of England and Wales, with the exception of the South-West and the West Midlands, saw affordability get worse in August. London, the North-West and Wales saw the biggest rises, with increases of 0.4% over the month.

Andy Gray, who’s head of mortgages at the Woolwich, said: “With the increase in base rates in August yet to filter through, the cost of borrowing still has some way to go and it will become increasingly questionable whether another increase in interest rates is needed as the steam already seems to be coming out of the market.”