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Mortgage Costs to Surge for First-Time Buyers and Landlords in 2024

In a recent analysis conducted by Octane Capital, it has been revealed that first-time buyers may face an annual increase of £398 in their mortgage costs, while landlords could see a substantial jump of £367 in 2024.

The study focused on the current repayment costs for both first-time buyers and landlords, examining how these expenses might change if mortgage rates remain stagnant and house prices follow the predicted upward trajectory.

Forecasts suggest a 3% increase in house prices throughout 2024. This projection would elevate the average price for first-time buyer properties from £236,326 to £243,416. Simultaneously, landlords would witness their average investment costs climb from £284,950 to £293,499.

As of today, the average first-time buyer secures a mortgage of £200,877 after placing a 15% deposit amounting to £35,449. At the current average rate of 4.4%, this translates to a monthly repayment of £1,105. However, if mortgage rates remain unchanged and house prices surge as anticipated, prospective buyers a year from now may face a higher monthly repayment of £1,051, marking a £33 increase and an additional £398 annually.

Likewise, landlords currently contend with an average buy-to-let mortgage requiring a full monthly payment of £1,020 or an interest-only payment of £545 at an average rate of 3.06%. If house prices rise by the predicted 3%, buy-to-let mortgage costs could increase by £367 annually for full monthly repayments or £196 annually for interest-only repayments.

Jonathan Samuels, CEO of Octane Capital, emphasized the growing confidence in the market, attributing it to a stable interest rate and decreasing mortgage rates. He cautioned potential buyers against delaying their purchases, citing signs of creeping up swap rates, indicating a likely increase in mortgage rates.

Samuels stated, “When you also consider that house prices are expected to rise by 3% this year, the decision to sit tight could be a costly one. As our research shows, waiting until the end of the year could result in your monthly mortgage repayment increasing by hundreds of pounds a year.”

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