Interest rates dropped late last year, but average monthly mortgage costs have still increased by 8.1% year-on-year, according to research by mortgage adviser Alexander Hall.
The report shows that the average interest rate for an 80% loan-to-value (LTV) mortgage with a 25-year term now sits at 4.3%, up from 4.03%. Meanwhile, the average house price has risen by 5.1% since January 2024.
Stephanie Daley, director of partnerships at Alexander Hall, said: “A greater degree of stability returned to the property market in 2024 and we certainly saw a settling of the landscape with respect to the mortgage market.
“However, despite two reductions to the base rate, we haven’t seen mortgage rates follow suit and, in fact, the monthly cost of a mortgage today sits higher than it did this time last year.
“This is an important factor for homebuyers to be aware of, particularly now that many will be acting with haste in hopes of beating the stamp duty deadline which expires on the 1st April this year.
“It’s always best to seek the advice of an expert mortgage advisor when looking to buy in any market conditions, as this will ensure you secure the very best mortgage available to you based on your financial position within the market.”
The average homebuyer now requires a mortgage loan of £233,657 after placing a 20% deposit of £58,412. Monthly repayments for the average buyer total £1,272, marking an increase of 8.1% or £95 per month on mortgage costs.
Over a year, this increase means today’s buyers pay £1,142 more compared to those who bought homes a year ago.