New research conducted by property purchasing specialist House Buyer Bureau reveals that homebuyers in the current market face mortgage repayments up to 60% higher than those who purchased in December 2021 when interest rates first began to rise.
The study examined the present cost of a mortgage across various common products available to homebuyers and compared these costs to rates available in December 2021.
Findings show that a homebuyer opting for a two-year fixed-rate mortgage with a 95% loan-to-value (LTV) now pays an average rate of 6.11%, translating to a monthly repayment of £1,793. This figure represents a significant 52.2% increase, or an additional £615 per month, compared to December 2021.
However, the largest percentage increase in monthly repayments is faced by those choosing a two-year fixed rate at a 75% LTV. In December 2021, such buyers would have repaid £811 per month at a 1.
57% interest rate. Today, the same mortgage demands a monthly repayment of £1,292 at the current rate of 5.17%. This amounts to a staggering 59.4% increase, meaning buyers now pay an additional £481 per month.
Additionally, those opting for a three-year fixed mortgage at the same 75% LTV are now paying 58.9% more per month at the current rate of 3.54% compared to December 2021, resulting in a £468 increase in monthly mortgage repayments.
Surprisingly, homebuyers purchasing on a standard variable rate have fared best in the current market despite 11 consecutive interest rate hikes. House Buyer Bureau’s research indicates that the average rate has risen from 3.61% in December 2021 to 6.66% today. While this has pushed the average monthly repayment to £1,489, it represents the smallest increase, up 46.2% or £471 per month.
Chris Hodgkinson, managing director of House Buyer Bureau, said: “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.”
