Recent rate rises have had a big knock-on impact of the cost of mortgages.
The five-year rate is sometimes lower that the two-year rate is because investors might forecast that interest rates will come down at a later date. A 10% deposit would be £20,875, which would be equal to 55% of average annual pay at that time - "an all-time high", said Robert Gardner, Nationwide's chief economist."It is not quite as high as it was relative to earnings because house prices have come down and people's incomes on average have gone up."While average wages have risen - up 7.3% according to the latest data from the ONS - they continue to lag behind the cost of living.
The building society said that a year ago, monthly mortgage payments accounted for around 32% of take home pay.Mr Gardner said that even though the unemployment rate is expected to rise - from 4% to nearly 5% in 2026 according to the Bank of England - it will hopefully remain low by historic standards.