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Average FTB mortgage payments up 37 per cent since January – Rightmove

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  • 22/09/2022
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Average FTB mortgage payments up 37 per cent since January – Rightmove
The latest base rate rise will push the average monthly mortgage payment for new buyers to £1,112, a 37 per cent jump on January’s figure.

Figures from Rightmove suggest the average monthly payment for new first-time buyers was £812 at the start of the year. The £300 difference could mean that average payments will account for 42 per cent of a first-time buyer’s gross average salary, taking up the highest share of income since May 2012. 

Average mortgage rates have crept up over the year, coinciding with the increasing base rate. The 0.5 per cent rise to 2.25 per cent announced today is expected to push both fixed and variable mortgage rates up further. 

Currently, a typical two-year fixed mortgage at 90 per cent loan to value (LTV) has a rate of more than four per cent. The last time the average rate for this kind of mortgage was priced at this level was in September 2014. 

Tim Bannister, director of property data at Rightmove, said even though the majority of people were on fixed rate mortgages, those with terms ending in the next six months would be concerned. 

He said: “It’s likely that those who choose to fix again will find that rates have doubled in some cases since they last locked in, and so despite paying down some of their debt they could find their new monthly mortgage payments are higher, even if they’ve moved into a lower LTV bracket and have built up equity.  

“They will now face the tough decision of moving to a tracker mortgage in the hope that interest rates drop again soon, or taking another fixed deal for a bit more certainty on their outgoings.” 

 

Overlooking affordability worries

Despite affordability pressures, demand for homes from first-time buyers is up 27 per cent compared to the pre-pandemic five year average. 

As rates rise, the average first-time buyer deposit has gone up to £22,409, which is 57 per cent higher than it was a decade ago. In that same timeframe, gross monthly salaries have risen by 32 per cent. 

Bannister added: “Despite interest rates rising, demand in both the first-time buyer sector and the overall market is still up on the longer-term pre-pandemic average, signalling that many are adapting to changing rates in their plans and getting on with moves.  

“This sense that it’s going to become more expensive to borrow means that those thinking of buying for the first time may rush to fix now before rates rise further.”  

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