Mortgage and Property Investment Magazine Logo

First-Time Buyers Have Faced a £290 Monthly Mortgage Hike After Previous BoE Rate Rises

by | May 9, 2024

Share this article

Today, the Bank of England’s (BoE) Monetary Policy Committee (MPC) took the decision to maintain the UK base rate at 5.25%.

John Fraser-Tucker, Head of Mortgages at online mortgage broker Mojo Mortgages comments:

“In a move that has likely disappointed many existing and prospective homeowners, the Bank of England (BoE) Monetary Policy Committee announced today that they continue to hold the base rate at 5.25%. It’s been held at this level since August 2023, with the last in a succession of 14 increases. 

 
 

“Several economists expect that the BOE will start to reduce the base rate by the end of the year, with some estimating June, and others as late as September for the first rate cut. However, it’s impossible to predict for certain. 

“In the past few weeks, we’ve seen mortgage rates begin to edge up again. We decided to look at the impact that the base rate decisions have had on our first-time buyer customers to date.”

First-time buyer monthly mortgage payments have soared by £290 in the last two years

 

Mojo Mortgages can reveal that in April 2022, the average mortgage rate for a first-time buyer was 2.68%. For a property that costs £250,000 with a 10% deposit and a 30-year loan term, the monthly cost would be £910.

However, the same property (£250,000 with a 10% deposit) would now cost an average of £1,200 per month due to an average mortgage rate of 4.95%.

This represents an increase of £290 per month, which equates to:

 
 
  • £3,480 extra over a year
  • £6,960 extra over a two-year fixed-rate mortgage
  • £10,440 extra over a three-year fixed-rate mortgage
  • £17,400 extra over a five-year fixed-rate mortgage.
DateAverage mortgage rate for FTBsAverage loan amountAverage deposit Average property value
April 20222.68%£187,262£35,139£222,401
April 20244.95%£211,473£38,064£249,537
Difference in the last two years:+1.97%+£24,211+£2,925+£27,136

Commenting on the above, Claire Flynn added, This may be unwelcome news to those currently saving a mortgage deposit. But there have been some reports of house prices falling due to rate rises impacting affordability. This may mean you can secure a property for a lower price than a few years ago. 

“Remember though, house price trends can vary significantly in different parts of the country. Keep an eye on local selling prices for the property types you’re interested in to see what you may be able to afford. 

“And if you’re struggling to save a deposit for your first home, there are a number of schemes that may be helpful. A mortgage broker, like ourselves, can help you investigate your options.”

 
 

Share this article

Related articles

FTBs paying 191% more than their parents did

FTBs paying 191% more than their parents did

New research from My Home Move Conveyancing, the UK’s largest conveyancing services firm, reveals that even after adjusting for inflation, the cost of getting on the ladder today is 191% higher for the average first-time buyer versus what their parents would have paid...

Sign up to the Mortgage and Property Newsletter

Trending articles

IFA Talk logo

IFA Talk Mortage and Property is the new addition to the IFA Talk podcast family, where we discuss the latest topics relevant to Mortgage and Property professionals.

IFA Talk Mortgage & Property Podcast