A minor decrease in the flat interest rates and in the median house price aided in reducing the proportion of after-tax pay needed to service a mortgage on a median home to 55.9 percent in May from 56.4 percent in April.

The latest BNZ home loan affordability survey complied by Interest. co. nz presents the above mentioned fact. In the month of March last year, home loans were most unaffordable when they took 83.4% of after-tax pay to service.

During the year 2008 affordability improved however the improvement ended in February, March and April of this year when house prices stopped falling and interest rates began to bottom out.

BNZ general manager of strategy and marketing Blair Vernon said, "Home buyers will welcome this slight improvement again after a few months of stagnation." Approximately 40% is the threshold proportion of after tax income considered prudent to sustainably own a house.

(via TopNews New Zealand. Contributed by Manish Verma)