The ongoing crisis in living costs has resulted in soaring interest rates and an average uplift in residential mortgage payments of £71.50 in 2022 so far.
For most homeowners, the big question is how far rates will continue to climb and how much they might be expected to pay for their mortgage if the economy doesn't turn around quickly.
This month, Revolution has examined average mortgage costs across the UK and explored the rates payable on variable mortgages to demonstrate where costs are changing and what that might mean for your household budget.
Changes to Average Mortgage Costs in 2022
The average UK mortgage in December last year, for a property purchased through a mortgage, reached £282,038, with a 15% deposit of £42,306 leaving a balance of £239,732.
At the time, interest rates were around a median of 3.61%, equating to a cost of £1,214.35 based on a standard variable product.
Eight months later, we see a very different picture, with increases to the base rate pushing average interest rates to 4.25% on mortgage borrowing.
Monthly repayments on a variable rate residential mortgage have increased to a £1,285.25 average, or a £71.50 increase.
London is, perhaps unsurprisingly, been the region where mortgage repayments have peaked, with most homeowners paying an extra £128.97 a month.
Upmarket areas have been particularly affected, with monthly uplifts of £354.75 in Chelsea, £258.44 in the City of Westminster and £226.57 in Camden.
Elsewhere, monthly mortgage costs have risen the most in the following areas:
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Area
|
Monthly Mortgage Increase
|
|
Elmbridge Surrey
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£179.12
|
|
Three Rivers, Hertfordshire
|
£149.78
|
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St Albans, Hertfordshire
|
£147.54
|
|
Waverley, Surrey
|
£137.35
|
Managing Higher Mortgage Repayments
The changes to average mortgage payments are concerning, with most homeowners in the UK now paying over £70 more for the same mortgage than just a few months ago.
Other living costs have undoubtedly combined to reduce expendable income by a large margin.
Variable rate mortgages always have a proportion of risk because it is very difficult to forecast economic activities with any certainty, and the associated interest rates will rise or fall, sometimes without much warning.
In the months ahead, homeowners must remain aware of the changes to their mortgage repayments and seek professional financial advice where required.
Many lenders offer the opportunity to apply for repayment holidays. However, these may be limited to a maximum number of months within the term. Borrowers could also discuss temporarily switching to an interest-only mortgage to avoid defaulting.
If you are concerned about coping with your mortgage payments, particularly if you are on a variable-rate mortgage, please contact Revolution Finance Brokers for further assistance.
