Mortgage repayments forecast to increase by as much as £400 a year | Personal Finance | Finance

Mortgage repayments are forecast to increase by nearly £400 a year on average if interest rates fail to reduce and house prices rise as predicted.

Breaking the costs down, specialist property lending experts, Octane Capital, estimated that the nation’s first-time buyers could see the annual cost of their mortgage climb by £398 per year in 2024, with landlords also seeing a £367 year-on-year jump.

According to the lenders, the general expectation is that house prices will increase by three percent over the course of 2024.

This would see the average first-time buyer house price increase from £236,326 to £243,416.

Meanwhile, this could indicate the average landlord would see the average cost of investing climb to £293,499 from £284,950.

Today, the average first-time buyer requires a mortgage of £200,877 having placed a 15 percent deposit of £35,449.

Should mortgage rates fail to reduce and house prices rise as predicted, this would see the same first-time buyer looking to purchase a year from now paying a full monthly repayment of £1,051 per month, according to Octane Capital’s calculations.

Similarly, the average landlord would also see the cost of their monthly repayments increase should they opt to wait until this time next year before purchasing.

Currently, the average buy-to-let mortgage requires a full monthly payment of £1,020 or an interest-only payment of £545 at the average rate of 3.06 percent.

Should house prices increase by three percent as predicted, this would see the average cost of a buy-to-let mortgage increase by £367 per year if making a full monthly repayment, or £196 per year if making an interest-only repayment.

Jonathan Samuels, CEO of Octane Capital, commented: “Market confidence is growing and buyers have been encouraged by both a freeze on interest rates and a reduction in mortgage rates.

“This has led to a surge in activity as they look to capitalise on the lower cost of borrowing before it’s too late.

“Those considering a purchase this year would be wise to follow suit. In recent weeks we’ve seen signs that swap rates are starting to creep up, which indicates that mortgage rates are likely to do the same.

“When you also consider that house prices are expected to rise by three percent this year, the decision to sit tight could be a costly one.”