Mortgage repayments forecast to increase by as much as £400 a year

The latest research by specialist property lending experts, Octane Capital, estimates that the nation’s first-time buyers could see the annual cost of their mortgage climb by £398 per year in 2024, with landlords also seeing 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 general expectation is that house prices will increase by 3% over the course of 2024. This would see the average first-time buyer house price increase from £236,326, to £243,416, while the average landlord would see the average cost of investing climb to £293,499 from £284,950. 

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

Should mortgage rates fail to reduce and house price rise as predicted, 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. 

While a £33 monthly increase may not sound much, it amounts to an additional £398 per year. 

Similarly, the average landlord would also see the cost of their monthly repayments increase should they opt to wait until this time next year before purchasing. 

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%. 

Should house prices increase by 3% as predicted, this would see the average cost of a 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. 

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CEO of Octane Capital, Jonathan Samuels, commented:

“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.”

Data tables and sources

Data tables and sources can be viewed online, here.

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