The average monthly cost of repaying a mortgage has climbed by 56% in the last decade, with a further 8% increase forecast by the end of the year, according to the latest data from Revolution Brokers.
Data found that based on the average UK house price of £278,071, minus a 15% deposit of £41,711, UK homebuyers require a mortgage loan of £236,360 in the current market.
The current average rate for a standard variable rate mortgage at 5.17%, which means the average homebuyer is repaying £1,405 per month on their mortgage.
After adjusting for inflation, this is 26% higher than just five years ago and 56% more per month than the average repayment of £899 10 years ago.
Revolution Brokers says this has been driven by the increased cost of buying a home, with the average UK property increasing by 65% in the last decade, while the average standard variable rate has increased by just 0.95% in the last 10 years.
By the end of this year alone, house prices are predicted to climb by a further 2.3%, with the average mortgage rate also expected to increase by 0.5%.
This is a far higher rate of increase in just a few short months than the 0.16% increase seen over the last five whole years and more than half that seen over the last decade, Revolution Brokers says.
The increase means the average monthly cost of repaying a standard variable rate mortgage will climb by a further £107 per month to £1,512 (+8%), which will squeeze finances by almost £1,300 more per year.
Revolution Brokers founding director Almas Uddin comments: “It’s certainly looking like a tough couple of months ahead with house price growth showing no signs of slowing, while mortgage rates are also set to spike by quite some margin when compared to the increases seen over the last decade.”
“For those looking to get a foot on the ladder, it means their monthly mortgage repayments will now be significantly higher, while those existing homeowners on a variable rate will also see their household finances squeezed that much further.”
“The silver lining is, that so far, property values have seemed impervious to the wider economic backdrop and so while the cost of homeownership is climbing, it remains a very sound investment.”
