Scottish homes 'at most affordable' since 2002

The report suggested lower house prices and reduced mortgage rates had boosted affordability

Mortgage payments for new borrowers in Scotland are at their most affordable for nine years, a report has suggested.

The Bank of Scotland said payments during the second half of 2011 were at their lowest as a proportion of disposable earnings since 2002.

Typical mortgage payments for both first-time buyers and homemovers stood at 20% of disposable earnings by the end of last year.

This was well below the average of 30% recorded over the past 27 years.

The report suggested lower house prices and reduced mortgage rates had been the main drivers behind the significant improvement in affordability.

Seven of the ten most affordable local authority districts in the UK were in Scotland, according to the bank.

'Significant improvement'

East Ayrshire was the most affordable local authority district in the UK, with typical mortgage payments accounting for 15.7% of average local earnings. It was followed closely by West Dunbartonshire and North Ayrshire (both 16.2%).

Edinburgh was the least affordable area of Scotland, with average mortgage payments on a new loan accounting for 26.2% of average local earnings.

Aberdeenshire (25.9%), Perth & Kinross (25.6%) and Highland (25.5%) were the next least affordable.

Bank of Scotland housing economist Nitesh Patel said: "Mortgage payments in Scotland account for only a fifth of disposable earnings, compared to over a quarter for the UK as a whole.

"The falls in house prices and cuts in mortgage rates in the last few years have resulted in a significant improvement in housing affordability for those able to raise the necessary deposit to enter the market."

She added: "The marked improvement in affordability was a key factor supporting housing demand in 2011. The prospect of an exceptionally low Bank of England Bank Rate over the foreseeable future should maintain affordability at favourable levels in 2012."