The cost of servicing mortgages across England and Wales fell by 0.2% in January to 18.4% of household take-home pay.

This is the lowest level of payments since July 2005, according to the latest monthly figures from the Woolwich Mortgage Affordability Research.

The South of the country is driving the reduction in costs. In January the cost of servicing mortgages fell by 0.3% in the Eastern Counties to 18%, by 0.2% in the South West and 0.1% in London and the South East.

Over the last six months the South-West has seen the burden fall by 0.8% from 18.8%. However, Wales, the North-East and the West Midlands all saw their mortgage burden increase in January.

Andy Gray, head of mortgages for the Woolwich said: "There are a number of key influences on the prospects for house prices, one is that earnings continue to grow steadily, that base rates remain stable or fall, and finally general consumer confidence remains positive."

"At the moment we have two out of three of these with wages out pacing house price increases over the last year and interest rates looking more likely to fall than go up."

"Static house prices in the south over the last 18 months, together with increased wages, have led to a fall in the mortgage burden which may well be the reason we are seeing the beginnings of a house price recovery as has been reported in various surveys."

"The key, however, to a sustained recovery will be how the consumer feels and at the moment increasing energy bills, slowing credit card spending and nervousness on the high street is making them wary."

"Good news on the consumer front over the coming months though could really give the housing market a long term boost."

The Woolwich Mortgage Affordability Research monitors 1.3 million Barclays Group current accounts that have both income and mortgage payment activity on them each month. The scale and diversity of the sample gives a very good representation of mortgage affordability across England Wales.