The latest market analysis by Revolution Brokers reveals that rising interest rates mean UK homebuyers have seen a £71.50 increase in the monthly cost of their mortgage so far in 2022 alone.
As rising interest rates cause concern up and down the country, Revolution Brokers has looked at the increasing cost of a mortgage based on variable rate mortgages taken out in December 2021 and the changing cost based on increasing rates versus the remaining loan left to pay.
The research shows that, back in December 2021, the average house price paid by a mortgage-backed homebuyer was £282,038. After putting down the average UK deposit of 15% (£42,306), they were taking out mortgages to the tune of £239,732
With an average mortgage rate of 3.61%, this meant that the average homebuyer using a standard variable mortgage paid £1,214.35 per month.
In the months since, the base rate has increased by 1%, pushing the average mortgage rate up to 4.25%. As a result, monthly payments on the average variable rate mortgage have increased by £71.50 to £1,285.85.
The biggest regional increase has, unsurprisingly, been seen in London where payments have increased by an average of £128.97 per month.
On a local authority level, the worst hit areas of London are Kensington & Chelsea (£354.75), the City of Westminster (£258.44), and Camden (£226.57).
Outside of London, the largest increase has been in Elmbridge, Surrey, where payments have spiked by £179.12, followed by Three Rivers (£149.78), St. Albans (£147.54) and Waverley, Surrey (£137.35).
Founding Director of Revolution Brokers, Almas Uddin, commented:
“These payment increases are significant, to say the least. A national increase of more than £70 per month means that hundreds of thousands of households will have seen their disposable income squeezed even further, during what is already a very tough time.
“Variable rate mortgages always come with a modicum of risk as it’s difficult, sometimes impossible, to predict what economic ups and downs are on the horizon.
The coming months could be very difficult for the average homeowner, as interest rates look set to keep rising, putting even further pressure on our finances in the process.”