Mortgages  

Buyers and sellers face eye-watering price increases

Buyers and sellers face eye-watering price increases
Photo montage by Monstera via Pexels

Britons are facing rising costs relating to property purchases and sales, with brokers warning clients to make allowances for mortgage payment hikes as well as higher costs when selling a home. 

According to broker Almas Uddin, founder of Revolution Brokers, there have been "significant" payment increases in the average monthly mortgage repayment.

His analysis of data from the Building Societies Association found a national increase of just over £70 a month. 

In some parts of the UK, the increase is £90 or even £120 a month, his research found (see table, below).

According to Uddin, this means "hundreds of thousands of households" face even greater squeezes in the coming months as the Bank of England raises rates to combat soaring inflation.

He said: "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."

Revolution Brokers 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.

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 per cent (£42,306), they were taking out mortgages to the tune of £239,732.

With an average mortgage rate of 3.61 per cent, Revolution Brokers said this meant the average homebuyer using a standard variable mortgage paid £1,214.35 a month. 

However, in the months since, the base rate has increased by 1 per cent, pushing the average mortgage rate up to 4.25 per cent. The MPC has also indicated rates could hit 2 per cent in 2023.

As a result, monthly payments on the average variable rate mortgage have increased by £71.50 to £1,285.85. 

Table: The change in monthly mortgage repayments (standard variable rate) between Dec 21 and May 22

LocationMortgage average house price - Dec 2021Average deposit at 15% (Dec 2021)Full monthly repayment - Dec 2021Full monthly repayment - May 2022Difference £
London£508,713£76,307£2,190.32£2,319.29£128.97
South East£378,689£56,803£1,630.49£1,726.49£96.00
East of England£343,309£51,496£1,478.15£1,565.19£87.04
South West£308,304£46,246£1,327.44£1,405.60£78.16
West Midlands Region£239,045£35,857£1,029.23£1,089.84£60.60
East Midlands£235,149£35,272£1,012.46£1,072.07£59.61
North West£207,918£31,188£895.21£947.92£52.71
Wales£207,181£31,077£892.04£944.57£52.52
Yorkshire and The Humber£197,319£29,598£849.58£899.60£50.02
Scotland£184,996£27,749£796.52£843.42£46.90
North East£155,850£23,377£671.03£710.54£39.51
England£297,264£44,590£1,279.90£1,355.27£75.36
Great Britain£282,038£42,306£1,214.35£1,285.85£71.50

Source: BSA/Revolution

According to Revolution Brokers, the biggest regional increase has been seen in London where payments have increased by an average of £128.97 per month. 

Uddin added: "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.”

But it is not just borrowers facing higher costs: purchasing specialist the House Buyer Bureau has revealed the nation’s home sellers are now paying £793 more in estate agent commission when selling their home.

Research by the HBB showed that, at the end of December and prior to the outbreak of Covid-19, the average estate agent bagged £3,771 in commission.