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UK mortgage repayments rise nearly 60%

The House Buyer bureau has stated that mortgage repayments in the UK could now be up to 60% higher for the average household, compared to before the interest rate increases.

With higher property prices and mortgage rates in recent years, many new buyers and home movers have been wary of joining the property ladder. It is understandable to be concerned about facing higher prices – particularly with the current UK cost of living crisis.

On this page, we will discuss why your mortgage repayments may have gone up and how likely you are to be affected.

Why have average mortgage repayments increased?

Mortgage price increases can be directly linked to the increasing Bank of England (BoE) base interest rate over the last year, coupled with rising inflation.

Lenders will generally adjust their Standard Variable Rate (SVR) based on any changes to the Bank of England rate. Those with tracker mortgages will always be most affected by BoE changes, as their interest rates are directly linked to this figure.

Learn more about variable rate mortgages.

Learn more about tracker rate mortgages.

Find out more about the Bank of England’s most recent interest rate rise (the 11th in a row).

Which mortgages are worst affected?

The mortgages most notably affected by higher repayments have been 75% loan to value (LTV) mortgages on a two year fixed rate. These mortgages have faced a 59.4% increase in repayment costs since before the interest rate rises.

In December 2021, these mortgages would have had an average interest rate of approx 1.57% with monthly repayments of around £811. Now you would be looking at rates of 5.17% and monthly repayments of £1,292 for the same mortgage with the exact same terms and borrowing details.

Learn more about fixed rate mortgages.

Which mortgages are least affected?

At the moment, those on Standard Variable Rate (SVR) mortgages have experienced the lowest price increases. These mortgages have faced a 46.2% increase in repayment costs since before the interest rate rises.

On average the Standard Variable Rate for mortgage lenders has risen from 3.61% to 6.66% across UK lenders. This has resulted in an increase of about £471 per month for most of these mortgages (repayments rising from £1,018 to £1,489 per month).

What should I do if I am worried about my mortgage?

In today’s market, borrowers are looking at price increases of up to £500 a month (£6,000 per year) for their mortgages. This means many people will likely struggle with their repayments this year.

If you are worried about affording your repayment costs in 2023, it could be worth speaking to a mortgage EXPERT for further advice. Proper advice from a specialist broker can make a world of difference and often switching to a new deal can help you save thousands of £s per year.

Our team of skilled brokers can provide a mortgage review FREE OF CHARGE to check if you are paying too much for your mortgage. We can also advise on the best rates for new borrowers and how you could consolidate debts using your mortgage.

Useful resources

Office for National Statistics – How increases in housing costs impact households

Statista – Average interest rates for mortgages in the United Kingdom (2000-2023)

Financial Conduct Authority (FCA) – Mortgage lending statistics March 2023

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