Monthly mortgage payments could increase by as much as £1,300 per year by the end of 2022, according to new research released by Revolution Brokers.
Research from the brokers revealed that mortgage costs had already increased by 56% over the past decade – and the firm predicts a further 8% increase by the end of the year.
Revolution Brokers found their average monthly cost of repaying a mortgage through taking the average property value of £278,072, and then subtracting a 15% deposit of £41,711 from it.
This means that homebuyers require a mortgage loan of approximately £236,360 in the current market.
When adjusting for inflation, we see that the average homebuyer is repaying £1,405 per month on their mortgage, a number which is 26% higher than just five years ago, with households paying £1,115 per month, and 56% more per month than the average repayment of £899 10 years ago.
With house prices predicted to climb by a further 2.3% by the end of this year alone, it is no surprise that the average mortgage rate is also expected to increase by 0.5%.
This is a higher rate of increase than has been seen over the whole of the past five years. As mentioned, the result is that the average monthly cost of repaying a standard variable rate mortgage will potentially climb by a further 8%, to £1,512 per month.
Almas Uddin, founding director of Revolution Brokers, said: “It’s certainly looking like a tough couple of months ahead with house price growth showing no signs of slowing, while mortgage rates are also set to spike by quite some margin when compared to the increases seen over the last decade.
“For those looking to get a foot on the ladder, it means their monthly mortgage repayments will now be significantly higher, while those existing homeowners on a variable rate will also see their household finances squeezed that much further.
“The silver lining is, that so far, property values have seemed impervious to the wider economic backdrop and so while the cost of homeownership is climbing, it remains a very sound investment.”
