Reported by Robyn Hall from The Negotiator
New analysis shows average mortgage payments rose by 66% in the last year but analysis from wealth manager Quilter shows they could drop by a quarter come the end of the year.
Monthly mortgage payments could fall by as much as 25% by the end of the year, analysis from wealth manager Quilter shows.
The latest government house price index data shows that in November 2022, the average UK property cost £294,910. During the same period, mortgage rates peaked at around 6% in the aftermath of the mini-budget.
Those who purchased a property at this price and mortgage rate with a term of 25 years and an 80% loan to value ratio will be facing a monthly mortgage payment of £1,520 – some 66% more on the £918 for the equivalent property and mortgage deal a year earlier.
Quilter says that looking ahead to the equivalent in November 2023, should house prices fall by 8% as Halifax recently predicted and mortgage rates continue on their current downward trend to around 4%, the average UK house price could dip to £271,317 with monthly payments falling by 25% compared to a year earlier to £1,145.
Karen Noye, mortgage expert at Quilter, says: “Rising mortgage rates have played a significant role in the affordability ofbuying a first home or moving home, and for many these costs were pushed to unaffordable highs.
“It is therefore a real positive that looking forward we can hope to see such a significant dip in monthly mortgage payments by the end of the year should house prices and mortgage rates continue to fall as expected.”
There is no guarantee that the changes in the housing market will materialise.”
But she warns: “There is no guarantee that the changes in the housing market will materialise in the way that has been predicted.
“Lower inflation should mean interest rates stabilise and even start to drop with mortgage rates following suit. This could result in mortgage rates dropping to 4% by the end of the year and potentially even lower in the future.”