SCOTTISH homeowners spend a fifth of their disposable income on their mortgage, new research finds.

A Bank of Scotland study found mortgage payments cost Scotland’s homeowners 20 per cent of their income on average. This proportion has close to halved from 2007.

Monthly mortgage payments are nine per cent more affordable in Scotland than the UK average (29 per cent). Therefore, Scotland is the second most affordable place in the UK for mortgages after Northern Ireland (19 per cent).

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Mortgage affordability has only marginally deteriorated (19.7 per cent in 2016 to 20.1 per cent in 2017), despite the first interest rate in recent years and house prices in Scotland rising by seven per cent in the past year.

Five out of the ten most affordable Local Authority Districts (LAD) in the UK are in Scotland. Inverclyde is now Scotland’s most affordable location and is the UK’s second most affordable after Copeland in North West England. Inverclyde made the jump from fifth most affordable at the end of 2016 to Scotland’s most affordable with mortgage payments taking up 15.7 per cent of disposable income. North Ayrshire (15.9 per cent), West Dunbartonshire (16.2 per cent), Renfrewshire (16.4 per cent), and East Ayrshire (16.6 per cent) also feature in the UK’s ten most affordable locations.

In the past 12 months there has been a seven per cent rise in house prices in Scotland which has led to a slight decrease in mortgage affordability.

Despite the very slight decrease (0.4 per cent) in affordability, the percentage of disposable income typically spent on mortgage payments has nearly halved compared to a decade ago. At the end of 2007, mortgage payments typically cost Scots 38 per cent of their disposable income and now they pay 20.1 per cent with an average monthly mortgage payment of £442. This is £227 less than the UK average of £669.

Ricky Diggins, director at Bank of Scotland, said: “Despite the base rate towards the end of last year, it was the rise in house prices that had a slight impact on mortgage affordability for homeowners in Scotland.

“However even with the slight decrease in affordability over the last year, the average amount that homeowners spend on their mortgage payments as a proportion of disposable income is significantly less now when compared to ten years ago and Scotland is typically more affordable when compared to the rest of the UK.”

Mortgage affordability has improved across the whole of Scotland over the last decade

Affordability has improved significantly in all Scottish LADs since 2007. Mortgage payments as a proportion of average earnings have fallen by at least 15 per cent in 28 out of 31 areas. The Shetland Islands has seen the smallest change in mortgage affordability since 2007, improving by 6.8 per cent during that time.

Inverclyde saw the largest improvement in mortgage affordability where a proportion of disposable earnings fell by 23 per cent over ten years (38.7 per cent to 15.7 per cent). The least affordable location in Scotland is East Dunbartonshire where mortgage payments take up 24.7 per cent of average monthly disposable income. This has increased by 1.8 per cent since this time last year. Other areas to see deterioration are the Scottish Borders and Clackmannanshire (both 2.2 per cent).

East Renfrewshire has seen the biggest decrease in mortgage affordability (2.8 per cent), making mortgage payments as a proportion of average earnings 24 per cent.