Average mortgage repayments are now above £1,150, as house sales are set to plummet with further rate-rises expected.
Experts at Savills have said the Bank of England’s seventh consecutive base rate rise is hitting home-owners hard, and new buyers even harder.
The hike to 2.25 per cent yesterday, the highest since 2014, means home-owners may be paying higher rates on their mortgages.”
Lucian Cook, head of residential research at Savills, said while the rises have been “pretty well-signposted”, giving property-owners time to plan a way to lock themselves in to deals and beat further increases, some may not be so lucky.
New buyers will be hit hardest he explained: “The average buyer taking on a £280,000 mortgage to buy a home worth £330,000 will pay an extra £65 per month or £780 per year.”
The cumulative effect of the rate rises in 2022 means the average monthly mortgage bill has risen since the beginning of the year by £349 to £1,150.”
He said “existing borrowers..have locked into fixed-rate mortgages, meaning there will be no immediate impact. And numbers opting for fixed rates have risen dramatically in the past five years meaning the market is more insulated than in the early 1990s or 2007, for example.”
“But for those on a variable rate mortgage or coming to the end of a fixed rate it will mean an increase in mortgage costs”.
Cook added that the rate rise “ should not be unmanageable” because so many are in fixed term mortgages, while the “ relaxation of mortgage regulations we saw in August means fewer limits in terms of what buyers can borrow”.
Expecting a “softening of demand after two bumper years” for the property market, which will eventually lead to a “softening of prices” also.