Monthly mortgage payments drop 21% since 2008

The average mortgage repayments are more affordable than ever as new research shows the average monthly payment has fallen by more than a fifth since 2008.

Halifax research shows the average payment has plummeted by £950 from £4,521 to £3,571.

The drop demonstrates the huge drop in mortgage payments as the Bank of England has held interest rates at 0.5% for more than four years.

The record low rates are now being accompanied by Government lending schemes such as funding for lending that aims to depress rates further.

Halifax data shows mortgage payments as a total share of housing costs have dropped from 48% in 2008 to just 37% today.

However, mortgage payments are still the biggest single cost for households followed by energy bills which make up 18% of total spending.

Water bills have increased by an average 5.6%, or £27, over the past year.

The rising cost of bills is being helped by falling mortgage rates which has given families an extra 10% of their wages to spend.

Will rates fall further?

There is no sign of a rise in Bank of England interest rates as some members of the monetary policy committee, including governor Sir Mervyn King, vote for more quantitative easing.

Voting for more quantitative easing, the process of creating money to buy Government debt, is a sign that interest rates are staying low for a long time yet.

Another sign of long-term low rates is the appointment of Canadian central banker Mark Carney to succeed Mervyn King in July.

Chancellor George Osborne has told Carney he can officially keep rates low for months at a time instead of a monthly decision.

The Government funding for lending scheme also provides cheap loans to banks to pass on to consumers.

There are discussions to boost the scheme which could see rates fall yet again.

All the economic pressures point towards mortgage rates staying low and even falling further this year.

Can I get a mortgage?

Mortgages may be more affordable than ever but the biggest obstacle to buying a home can be the deposit.

The Government has launched an ambitious Help to Buy scheme to help people buy homes with a 5% deposit by giving lenders guarantees of up to 20%.

Osborne predicts it will boost mortgage lending by £130bn and create 190,000 new mortgages over three years.

If it fulfils some of these aims then it will be a major scheme helping many get on the ladder who would not otherwise have done so.

In its latest credit conditions report the Bank of England also reported signs that lenders are easing on high loan to value loans.

There are still problems offering high loan to value deals such as regulatory capital requirements but it is easing.

There are signs that the Government may relax some of these capital requirements as part of the Help to Buy scheme.

The deposit barrier remains but lenders and Government are trying to help people jump the hurdle and it is getting easier.

With mortgage costs so low and home buying becoming easier there are many reasons to be positive about the housing market in 2013.