ao link
Credit Strategy homepage
Intelligence, insight and community
for credit professionals

Dear visitor,
You're reading 1 of your 3 free news articles this quarter

 

Register with us for free to get unlimited news, dedicated newsletters, and access to 5 exclusive Premium articles designed to help you stay in the know.

 

Join the UK's leading credit and lending community in less than 60 seconds.



Register now  or  Login

Mortgage payments fall by hundreds of pounds as confidence returns to the market 

The latest analysis from Octane Capital reveals that the average monthly mortgage repayment has dropped by hundreds of pounds since October 2022

Share on LinkedInShare on Twitter

This new analysis, based on the average house price stated in last week’s House Price Index, may suggest stability is returning to a previously unsettled market.

 

September’s mini-budget preceded a string of subsequent interest rate rises which pushed the cost of borrowing up and thus made life much more expensive for mortgage-paying homeowners.

 

In August 2022, just before the mini-budget, a typical 2-year fixed-rate mortgage at 75% LTV with a 25% deposit and an interest rate of 3.6%, resulted in an average monthly mortgage repayment of £1,113. 

 

By October, the impact of the mini-budget meant that the average rate increased to 6% causing the average mortgage repayment to rise by 28.5% to £1,430 per month. 

 

However, the negative impacts of the mini-budget didn’t last long and by the end of the last year, stability was starting to return. 

 

This has continued into January 2023 to the extent that homebuyers looking to make a purchase today can expect to pay £1,200 per month for their mortgage, a 14% reduction in the monthly cost of borrowing. This forecast is based off historic market data trends.

 

It’s even better news for those looking to buy with an interest-only mortgage. Between August and October of last year, the cost of the average interest only mortgage repayment climbed by 68.2%. This has since dropped by 24.5% between October 2022 and today. 

 

CEO of Octane Capital, Jonathan Samuels, commented: “The disastrous mini-budget, and the Trussonomics it was based upon, resulted in a great deal of market uncertainty which, in turn, led to reduced levels of buyer activity and cooling house prices during the closing stages of 2022. 

 

"However, those buyers who sat tight and weathered the instability have now been rewarded with a swift drop in the cost of borrowing and this has helped to steady the ship already this year. 

 

"As this confidence builds further, we expect rates to keep reducing and this will help rejuvenate the market as buyers return to continue their quest of homeownership.”

Share on LinkedInShare on Twitter

Stay up-to-date with the latest articles from the Credit Strategy team

Credit Strategy
PPA Independent Publisher Awards 2024

member of

Get the latest industry news 

creditstrategy.co.uk – an online news and information service for the UK’s commercial and consumer credit industry. creditstrategy.co.uk is published by Shard Financial Media Limited, registered in England & Wales as 5481132, 1-2 Paris Garden, London, SE1 8ND. All rights reserved. Credit Strategy is committed to diversity in the workplace. @ Copyright Shard Media Group