UK mortgage payers billed £3.1bn in interest each month


Leading property finance specialists, One77 Mortgages, has looked at the current mortgage bill of UK homeowners, how much of this is paid as interest, and how this has changed since a decade ago.

Based on data on total loans and rates from the Bank of England, One77’s research has found that the total value of all residential mortgage loans in 2018 was £1,423bn pounds, with a 65%/35% split between those on a fixed rate and variable rate products.

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In terms of the interest paid, last year mortgage fuelled homeowners paid out a total of £37.14bn, equating to a monthly mortgage interest payment of £3.095bn.

But with us enjoying record levels of mortgage affordability, how does this compare to 10 years ago?

In 2008, the total value of all residential mortgage loans was £1.191bn with an almost perfect 50/50 split between fixed and variable rate products.

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This equated to an annual interest payment of £66.57bn which breaks down to an eye-watering monthly interest bill of £5.547bn.

That’s a saving of £2.452bn in interest payments every single month!

However, during this time the average UK house price has increased by 24% and so this saving is down to the current affordability of mortgage products at present, as well as an increasing number of those paying off their mortgage.

Managing director of One77 Mortgages, Alastair McKee said, “We’ve talked for some time now about how affordable the cost of borrowing currently is for UK home buyers but for many of them, they won’t have known anything different.

“But when you compare the sheer volume of interest being paid now when to the amount paid ten years ago, it really does highlight how much more affordable things currently are.

“Unfortunately, this isn’t due to an adjustment in house prices and they’ve continued to climb due to growing demand and a lack of new homes being built. This reduction is purely down to a prolonged period of low-interest rates and the resulting affordability of mortgage products.

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“However, it’s also important to note that we currently have some of the highest levels of mortgage-free properties we’ve seen in a long time and this will be contributing to a reduction in mortgage costs.

“Essentially, the mortgage sector is keeping the UK market ticking over in tough market conditions, but should interest rates climb, we could see more problematic conditions evolve, especially if more homes aren’t built.”

  2008 2018
Total value of all mortgage loans 1,191bn £1,423bn
Variable product 49.5% 35%
Fixed product 50.5% 65%
Annual interest paid 66.57bn 37.14bn
Monthly interest paid £5.547bn 3.095bn