Current homebuyers are already benefitting from an increased level of mortgage affordability, with the average monthly repayment for those purchasing in September coming in at £64 less per month when compared with July, Octane Capital has revealed.
Octane Capital analysed the cost of a 5-year fixed rate mortgage for those placing a 25% deposit on the current average house price of £289,824, from July 2023 to the latest available data.
In July, the average mortgage was 5.79%, so the full monthly repayment came in at £1,373 per month, while the average payment for an interest-only mortgage was £1,049.
In August, the average rate fell to 5.34%, causing the average monthly mortgage payment to fall to £1,314, or £967 for interest-only.
By September, the average rate fell again to sit at 5.30%, and the average monthly repayment was £1,309, or £960 for interest-only.
Those looking to purchase now enjoying a cost saving of £64 per month compared to a few months prior when making a full mortgage repayment, climbing to £765 over the course of the year.
Those making an interest-only repayment saved £89 per month, or £1,065 over the course of the year.
Jonathan Samuels, CEO of Octane Capital, said: “After reaching scary highs, and much industry discourse suggesting they would remain that way for a long time, mortgage rates have started to fall over the past three months.
“This is wonderful news for those coming to the end of a fixed term, who will welcome the reduced stress on their household finances.
“For buyers, it means things are becoming more affordable which aligns nicely with the upcoming autumn rush on the housing market.
“And sellers should be happy, too, because cheaper borrowing means buyer demand should increase after many postponed their property searches in fear of mortgage costs getting truly out of hand.”
He concluded: “We’re confident that, barring any major disasters or further governmental calamities, rates will continue to drop, albeit slowly, between now and the start of the new year.”
