Mortgage ‘pain’ not easing for borrowers as average fixed rates climb

With the Bank of England base rate decision set to be announced later this week, mortgage rates are currently rising.

According to financial information website Moneyfacts, Tuesday’s average two-year fixed homeowner mortgage rate is sitting at its highest level since May 28.

Aneisha Beveridge, research director at Connells Group says first-time buyers are feeling the pinch especially.

She said: “Higher mortgage rates are affecting all borrowers, but it’s those with smaller deposits and higher loan-to-value mortgages who are feeling the pain most acutely. Many first-time buyers who fixed two or five years ago are now coming to the end of their deal without having benefited from the sort of house price growth that would have significantly reduced their loan-to-value ratio.

“Our data shows that the typical homeowner remortgaging this month has seen their monthly repayment rise by 22 per cent, equivalent to £144 a month. That’s up from a 16 per cent increase for borrowers remortgaging at the same time last year.

“First-time buyers are facing an even bigger jump, with repayments rising by an average of £155 a month, or 24 per cent, when they come to the end of a two or five-year fixed deal.”