Posted: 15th June 2023
Monthly mortgage payments could drop 25% by the end of the year
New analysis that has come through reflects that average mortgage payment rose by 66% in the last year. However, further analysis by wealth manager Quilter showcases that a drop could be apparent by the end of the year. This drop for monthly payments could be around 25%.
November 2022
According to the most recent government data on the house price index, the typical UK home in November 2022 cost £294,910 on average. In the wake of the mini-budget, mortgage rates reached a peak over the same time period of about 6%.
The monthly mortgage payment for someone who bought a property at this price, at this interest rate, with a duration of 25 years, and an 80% loan to value ratio will be £1,520, which is almost 66% more than the £918 for the same property and mortgage agreement a year earlier.
Predictions for a year later at November 2023
Looking ahead to the equivalent in November 2023, according to quilter, the average UK house price could drop to £271,317 with monthly payments falling by 25% from a year earlier to £1,145 if house prices decline by 8% as Halifax recently predicted and mortgage rates continue their current downward trend to around 4%.
A mortgage expert at quilter states:” Rising mortgage rates have played a significant role in the affordability of buying a first home or moving home, and for many these costs were pushed to unaffordable highs.” Therefore, she says it’s a positive seeing a dip within mortgage and house payments.
But she warns: “There is no guarantee that the changes in the housing market will materialise in the way that has been predicted.”
Overall, its great to see a potential dip within prices of housing is expected as the extreme high prices from last year has made it very difficult for people to afford their first own home. However, we should also realise that there is no certain guarantee of this and that things could change. We here at property hub wish you the best and hope that this expectation becomes an outcome and that people can therefore afford their very own first home. If you have any worries about this situation and how it may affect the property industry, please let us know and we can assist you with professional advice.
References
The Negotiator
If you have any questions, please speak to Sachinkumar Gupta of Property Hub Ltd.
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