While the cost of a mortgage has started to ease, the average monthly mortgage repayment is 57.4% more expensive than in December 2021, when interest rates first started to climb, research from Home Sale Pack has revealed.
However, there are ways in which mortgages can be made more manageable for those struggling with the continued high cost.
Home Sale Pack analysed the average monthly repayment costs on a 2-year fixed-rate 85% loan-to-value (LTV) mortgage looking at the current cost to homebuyers and how this has changed since interest rates first started to climb in December 2021.
In December 2021, the average UK house price was £266,170.
With a typical 15% deposit coming to £39,926, this means the average mortgage loan required was £226,245.
At the time, the average mortgage rate for a 2-year fixed-rate 85% LTV mortgage was 1.71%.
Over 25 years, this means the average monthly repayment cost came to £927.
However, interest rates started to skyrocket which also caused mortgage rates to climb.
In July 2023, the average mortgage rate for a 2-year fixed-rate mortgage (85% LTV) peaked at 6.35% – 4.64% higher than in December 2021.
With the average house price also increasing to £282,982, meaning the average mortgage loan size was £240,535, this pushed average monthly mortgage repayment to £1,602, an increase of 73% since December 2021.
Today, mortgage rates have started to ease, sitting at an average of 5.3%; however, the average house price also increased, to £285,201.
As such, the average monthly mortgage repayment is now £1,460.
This was 9% cheaper than it was versus the peak seen in July 2023, but still 57.4% more expensive than December 2021.
Ruth Beeton, co-founder of Home Sale Pack, said: “The falling cost of mortgages is good news, but it’s not great news because today’s mortgages are still considerably more expensive than those of 2021.
“Sadly, this might be a new norm we’re stuck with for many years to come due to increased interest rates after years of historically low rates.
“However, there are a number of ways in which you can make a mortgage more affordable and more manageable.
“But please do act with caution and make decisions based on advice from financial experts when you can.”
