This week, Zoopla published its latest House Price Index (HPI), revealing that in 2024, homeowners are paying 61% more on mortgage repayments per month than they would have three years ago.
And while you might be thinking that this means you will pay off your mortgage quicker, that is sadly not the case - as you might know, if you’ve recently applied or taken out a first-time buyer mortgage.
The reason for this increase is partly due to increased mortgage interest rates, which started rising three years ago in March 2021, going from an average of 1.8% interest to the current 4.5%. Another factor that’s partly to blame are house prices which are 13% higher than three years ago.
But despite this dire fact of high mortgage repayments, the report also shows that agreed house sales are up by 12% compared to this time last year, which is credited to increased consumer confidence and more homes available for sale than last year.
Zoopla reveals mortgage repayment are 61% higher than in 2021
Zoopla is the UK’s leading residential property resource and a trusted source when it comes to all things property and housing market. Last year, one of its reports revealed that rent growth is set to halve in 2024.
Unfortunately, its latest market analysis is not as optimistic, sharing that monthly mortgage repayments have increased by 61% since 2021 for those applying for a mortgage. Richard Donnell, Zoopla executive director, explains how they’ve arrived at this number.
‘Our analysis on mortgage costs looks at home buying through the lens of someone considering buying an average priced home today versus 3 years ago. We focused on how much higher monthly repayments are for the average home buyer using a 70% loan-to-value mortgage loan.’
Richard runs the Research & Insights team at Zoopla, leveraging Zoopla's unique data to provide insight into market trends, industry dynamics and government policies. His extensive knowledge of the housing and mortgage markets spans over 25 years. In the course of his work, he advises key bodies including the Bank of England, the boards of major banks and the Government on emerging risks and opportunities in the residential sector.
The south worse off than rest of UK
The report also shows that there is a regional difference between mortgage repayment rates as the South West, South East and East of England have it worse than everywhere else, with 61% being a country-wide average. Of course, with London being the worst affected area which is down to high house prices.
‘The analysis highlights that while market activity is up, house prices aren’t going to run away as affordability is still a barrier, especially in southern England,’ Richard says.
According to Zoopla, the average cost of mortgage repayments is over £5,000 per year higher this year compared to 2021 in the South of the country. Meanwhile, London is looking at an annual increase of £7,500. But other less affected regions deal with an increase that ranges between £2,300 and £3,900.
So at the end of the day, the 61% mark is only a country-wide average and the rise in your mortgage repayments can be both lower or higher than this compared to 2021, depending on where you live.
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