Mortgage payments for a new borrower in Scotland are at their lowest as a proportion of disposable earnings for a decade, according to new research from Bank of Scotland.

Typical mortgage payments for a new borrower (both first-time buyers and homemovers) at the long-term average loan to value ratio stood at close to 20% of disposable earnings in the first half of 2012.

There has been a continued fall in payments relative to earnings over the past year from 23% in 2011 Quarter 2, taking this measure further below the long-term average of 30%1.

Overall, mortgage payments have nearly halved as a proportion of income over the past five years from a peak of 38% in 2007 Quarter 4.

Mortgage payments account for the lowest proportion of disposable earnings in Scotland (20%). This compares with the UK average of 26%.

The ten most affordable local authority districts in the UK are all in Scotland. East Ayrshire is the most affordable local authority district in the UK with typical mortgage payments accounting for 15.0% of average local earnings. East Ayrshire is followed by West Dunbartonshire (16.1%) and North Ayrshire (16.2%).

Average mortgage payments on a new loan accounted for 25.7% of average local earnings in Aberdeenshire. Perth & Kinross (25.2%), Edinburgh (25.1%) and Highland (24.0%) are the next least affordable LADs.

“Mortgage payments in Scotland account for a lower proportion of disposable earnings than anywhere else in the UK,” said Nitesh Patel, housing economist at Bank of Scotland.

“In addition, all 10 of the most affordable local authority districts are in Scotland, with East Ayrshire the most affordable.”

Patel added: “Lower house prices and reduced mortgage rates have led to a significant improvement in housing affordability for those able to fund the necessary deposit to enter the market over the past five years. As a result, mortgage payments for a typical new borrower currently account for the lowest proportion of earnings for 10 years.

“The relatively low level of mortgage payments in relation to income is providing support for Scottish house prices. The prospect of interest rates remaining at low levels for sometime yet is expected to continue to be a key factor supporting the demand for homes, helping to keep house prices around their current level during the remainder of 2012.”