New research has revealed that despite homebuyers paying the most expensive monthly mortgage repayments since 2010, costs still remain a long way off historic highs.
The analysis by Revolution Brokers claims to show reveals that homebuyers are now paying the most expensive monthly mortgage repayments since 2010, but that costs still remain a long way off historic highs.
Official figures released by the Bank of England this week show that the number of mortgage approvals in the UK has dropped in the past month. And while this decline is reflective of the turbulent economic times facing the nation, Revolution claim that this activity is simply a reflection of approval rates returning to their pre-pandemic level. Therefore, they claim that rather than hitting a new low, approvals are simply returning to normal after a prolonged period of boom.
The analysis also claims that a big reason for this drop in approvals is due to buyer demand falling, which is being caused in part by rising mortgage costs. The research states that the average monthly repayment for a three-year fixed-rate mortgage over 25 years at 75% LTV with a 25% deposit is £948. This would be £86 more expensive than last year’s average and the highest it has been since 2010 when the average payment – after being adjusted for inflation – was £972/month, based on the study’s findings.
However, the findings also suggest that these figures are still considerably lower than 2007’s high point when the global financial crash pushed the average monthly repayment up to £1,355, according to the analysis. It is also highlighted the current hike in repayment costs is not an anomaly. as the study attempts to show that the average repayment has, with a couple of exceptions, been rising gradually since the 2012 low point of £771/month.
As for variable-rate mortgages the findings are similar, as the research shows the average monthly repayment of £1,135 is £49 higher than last year and the highest since 2008 when the average was £1,350.
The research by Revolution Brokers finds a similar story with variable-rate repayments which they also show to have been on an upward trajectory, with the odd anomaly, since 2011’s low of £771/month.
Founding Director of Revolution Brokers, Almas Uddin, commented:
“This is undoubtedly a hard time for buyers, not least those on a variable rate mortgage. However, we do still have something to be a little thankful for and that’s the fact that current economic turmoil has not pushed mortgage costs anywhere near to the crippling highs we saw as a result of the last global financial crash.
Furthermore, it is possible that we now have a more stable leadership in the UK which will calm some of the markets that have influenced this recent rise in mortgage costs and we have already seen mortgage rates start to reduce in recent weeks.”
