Mortgage costs expected to grow

The cost of a mortgage is expected to grow by £2,500 by the end of this year compared with December 2021, according to Zoopla.

Economists anticipate mortgage rates to rise in the coming months, with the Bank of England looking to tackle soaring inflation, which is at 9.1% and set to climb. Average rates for a five-year fixed-rate mortgage on a £250,000 loan, including a 25% deposit, currently stand at 3.37% – with this up from 2.64% in December.

The rates increase over the six-month period is the equivalent of more than £870, which Zoopla says will jump to £2,500 in extra costs should rates rise by another basis point.

Gráinne Gilmore, Head of Research at Zoopla said “Buyer demand is still strong in the housing market, but signals are emerging that the impetus may be easing, so those who want to make a move should investigate their options sooner rather than later. In addition, mortgage rates are likely to continue to climb, so locking into a rate shortly could save hundreds over the longer-term.”

“There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply, but the increasing cost of living, increasing mortgage rates for buyers and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”