A specialist lender claims that first-time buyers could see annual mortgage costs climb by £398 per year, while landlords suffer a £367 year-on-year jump.

Octane Capital analysed the current cost of repaying a mortgage for both landlords and first-time buyers and how this cost could change should mortgage rates fail to fall and house prices climb as forecast.

The lender claims that the general expectation is that house prices will increase three per cent this year, taking the average first-time buyer house price from £236,326, to £243,416, while the average landlord would see the average climb to £293,499 from £284,950.

Today, the average first-time buyer requires a mortgage of £200,877 having placed a 15 per cent deposit of £35,449. With the average rate currently sitting at 4.4 per cent, this equates to a full monthly repayment of £1,105.

Should mortgage rates fail to reduce and house price rise as predicted, Octane believes this would see the same first-time buyer looking to purchase a year from now paying a full monthly repayment of £1,051 per month.

Meanwhile under the same scenario the average landlord would also see the cost of their monthly repayments increase. Currently, the average buy to let mortgage requires a full monthly payment of £1,020 or an interest only payment of £545 at the average rate of 3.06 per cent.

Should house prices increase by three per cent as predicted, this would see the average cost of a new buy to let mortgage increase by £367 per year if making a full monthly repayment, or £196 per year if making an interest only repayment.

Octane chief executive Jonathan Samuels says: “Market confidence is growing and buyers have been encouraged by both a freeze on interest rates and a reduction in mortgage rates. This has led to a surge in activity as they look to capitalise on the lower cost of borrowing before it’s too late.

“Those considering a purchase this year would be wise to follow suit. In recent weeks we’ve seen signs that swap rates are starting to creep up, which indicates that mortgage rates are likely to do the same.

“When you also consider that house prices are expected to rise by 3% this year, the decision to sit tight could be a costly one. As our research shows, waiting until the end of the year could result in your monthly mortgage repayment increasing by hundreds of pounds a year.”