Revealed - mortgage costs increase up to 21.5%

New findings by Revolution Brokers reveal exactly how much more money homeowners and buyers can expect to pay for their mortgage repayments.

These figures take the consecutive increase in interest rates by the Bank of England that came into action a few weeks ago.

By analysing the average cost of a home in the UK as well as the current and mortgage rates for a variable rate and a three year fixed mortgage, Revolution Buyers were able to establish just how much these costs have changed.

Changes to variable rate mortgages 

12 months ago, the average UK house price sat at £265,809 and interest rates were only 0.1%. Around £225,938 was borrowed by the average homebuyer and the 15% deposit totalled £39,871.

With a 3.61% standard variable rate, this would result in a monthly repayment of £1,144.47 - £679.70 in interest and £464.77 cleared on the mortgage loan.

Overall, this means that during this time the average UK homebuyer was paying £38.15 per day in mortgage costs, and interest rates remained at 0.1%.

Revolution Brokers claim that with the average standard variable rate of 4.91%, is paid £1,304.26 per month. In total, this is a 14% increase in 12 months, stretching household finances by almost £160 more per month.

Changes to 3 year fixed mortgages

Before the Bank of England’s first base rate increase, the best 3 year fixed rate was available in October of last year at 1.12% at a 75% loan to value. 

Based on the £264,307 average house price at that time, those buying a property would secure an average monthly repayment of £757.89 for the following three years.

According to the latest data, this average mortgage rate has since increased to 2.26% (in April this year. Therefore, those who have bought a property in the current market would have a monthly repayment cost of £920.72. 

Overall, these figures show a 21.5% increase where homebuyers are paying £162.83 per month more than buyers last year.  

Founding director of Revolution Brokers, Almas Uddin, commented: “The current cost of living crisis is hitting many households and with interest rates now 1.15% higher than they were this time last year, many are finding their household income is being stretched even further by the increasing cost of their mortgage." 

"While an additional £5 per day may seem manageable to most, it soon adds up and really does highlight why you’re ill-advised to borrow beyond your means, particularly with a variable rate product." 

"For those currently looking to buy, it also means the cost of securing a fixed rate product has increased and this is likely to curb the sums they are willing to borrow in order to climb the property ladder."

"The bad news is that further increases are expected and only time will tell as to what impact this has on buyer demand and, as a consequence, the overall health of the property market.”