Money People Online Money People Online

Search MoneyPeopleOnline:

Monthly mortgage repayments up by nearly 60% in the UK

A recent study has identified that the average homebuyer in the UK could now be paying nearly 60% more for mortgage repayments

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 31 March 2023

2 min read

Monthly mortgage repayments up by nearly 60% in the UK

A recent study by the House Buyer Bureau has identified that the average homebuyer in the UK could be paying nearly 60% more for mortgage repayments than pre-interest rate increases.

Many buyers have been put off their search to join the property ladder in recent years because of unaffordable mortgage repayments, and inflated property valuations. Would be borrowers, are understandably concerned about how much they can afford to borrow with the current strain on our pockets from cost of living.

Surprisingly, the most heavily impacted mortgages have been 2 year fixed rate deals at around 75% Loan to Value (LTV). These loans in December 2021 were previously around 1.57% and monthly repayments would have been £811. In the current market, the same mortgage is 5.17% with a monthly repayment of £1,292.

This gives an increase of 59.4% based on exactly the same mortgage loan details and borrowing compared to before the Bank of England first increased its interest rates.

Some other mortgage comparisons include:

Loan to ValueMortgage typeCurrent Mortgage RatesMortgage repayment increaseDifference
95%2 Year Fixed6.11%£61552.2%
75%3 Year Fixed3.54%£46858.9%

Learn more about fixed rate mortgages in our guide ‘Everything you need to know about fixed rate mortgages.

Currently the people who are experiencing the lowest increases are the ones with the most options to remortgage. Standard Variable Rate (SVR) mortgage rates have seen an increase of 46.2% in their monthly repayments.

The average Standard Variable Rate has increased from 3.61% in December 2021 to a current rate of 6.66%. This gives an increase on monthly mortgage repayments of £471 from £1,018 to the current repayment figure of £1,489 per month.

Borrowers in today’s mortgage market are seeing an average increase on their monthly repayments of around £500, so approximately £6,000 per year. In an already difficult economy, mortgage borrowers could be much worse off than pre-2021 interest rate rises.

Inflated house prices and higher mortgage interest rates has had a dramatic impact on the housing market and our ability to borrow. With figures like those above, it makes sense that the Financial Conduct Authority recently predicted over 350,000 mortgage borrower were likely to struggle repaying their mortgage in 2023.

Learn more about the recent 11th consecutive rise to Bank of England interest rates and see our predictions in our MPO interest rate forecast for 2023.

Read more about recent government announcements affecting housing and mortgage rates in our ‘Budget 2023 update for mortgages and housing’.

What should I do about my mortgage or remortgage?

If you need more information about your existing mortgage or to understand how much you can borrow on your new mortgage, you should speak to a qualified mortgage expert. You could save hundreds of £’s every month on your mortgage payments by getting proper advice from a specialist.

If you have credit issues or if you need to consolidate debt then you can save even more by getting proper mortgage advice. Mortgage rates are extremely volatile in the current mortgage market and therefore borrowers should be wary about making any rash decisions.

Keep up to date with the latest mortgage and financial updates in our MPO news section.

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

Sign up for our newsletter

Sign up today for all the best deals and helpful guides. Take control of your finances the MoneyPeople way!