Buyers today are paying as much as 60% more on their monthly mortgage cost compared to 15 months ago, according to research from House Buyer Bureau.
The property purchasing specialist analysed the current cost of a mortgage across the most common products available now, compared to December 2021 when interest rates first started climbing.
While the price difference varies depending on the product, it’s more than double in the average fixed rates and loan-to-values researched.
Homebuyers opting for a two-year fixed rate today on a 95% LTV mortgage will pay the highest price to get on the ladder. This average rate of 6.11% results in monthly repayments of £1,793, which represents a 52.2%, or £615 per month, increase compared to December 2021.
Those wanting a two-year fix at 75% LTV have seen the highest percentage increase with a 59.4% increase in the monthly mortgage payment. In December 2021, they would have secured a fixed rate of 1.57%, paying an average of £811 per month. Whereas the same mortgage today will set buyers back £1,292 per month on a rate of 5.17%.
For a three-year fixed rate at 75% LTV, it’s a rise of 58.9% or £468 more every month.
Despite the steady rise in interest rates, buyers on standard variable rates have fared the best in the current market, with a 46.2% increase in monthly repayments, representing a £471 rise to £1,489. The difference in rates is 3.61% in December 2021, compared to 6.66% today.
House Buyer Bureau managing director Chris Hodgkinson comments: “Since the Bank of England began to increase interest rates, homebuyers have seen the cost of borrowing climb and the average monthly mortgage repayment is now considerably more expensive, at a time when households are already stretched extremely thin.
“This has predictably had an impact on the wider market, with buyers no longer able to match the high asking price expectations seen throughout the pandemic boom. As a result, house prices have cooled and, in many cases, buyers have had to reassess their position in the market having already made an offer.
“This has led to a higher degree of market uncertainty and while we don’t anticipate any drastic reduction in property values as a result, it’s certainly a much trickier landscape for both buyer and seller at present.”
