Rising interest rates mean that homeowners renewing their mortgages this year will likely face vastly increased monthly repayments.
Recent months have seen a series of interest rate increases which have resulted in mortgage repayments shooting up for those looking to remortgage now. Costs have increased across every property type, with semi-detached homeowners taking out new fixed rate products paying 61% more on average for their mortgages in 2022 compared to 2021.
According to Office for National Statistics data, repayments have increased by 60.7% on detached UK properties, 59.6% for terraced houses and 54.6% for flats and maisonettes.
While rates are easing slightly as inflation gradually decreases, households renewing their fixed rate mortgages this year are almost guaranteed an increase in their interest rates, meaning higher monthly repayments. This can come as a real blow to your budget if you’ve been paying one rate for several years and it suddenly jumps up.
The Office for National Statistics (ONS) research shows that the average quoted mortgage rate in December 2019 (assuming a five-year fixed rate mortgage offer over 25 years at a 75% loan-to-value) was just 1.7%, staying relatively stable in the following months and eventually hitting a record low of 1.3% in September 2021. Rates began to creep up thereafter, reaching 1.6% in December 2021 and peaking at 5.6% in October 2022, before lowering slightly to 5.1% in December.
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
The chart below shows how the average mortgage rate has evolved over the two years to December 2022, again assuming a five-year fixed mortgage offer over 25 years at a 75% loan-to-value.
Source: Bank of England
Translating this data to cash terms shows that average mortgage repayments on new mortgages have shot up over the past year. Despite a general upward trend over the last decade, 2022 in particular shows a stark increase across the board. For instance, a semi-detached homeowner getting out a five-year fixed rate deal in December 2022 at a 75% loan-to-value will on average be paying £771 more than their counterpart just 12 months earlier. The increase over the same time period from the previous year was only £64.
Our mortgage repayment calculator can help you work out what your monthly repayments will be based on the interest rate, mortgage amount, and the length of your mortgage term. If you prefer to speak to someone – arrange to get expert mortgage advice from an experienced mortgage advisor.
Although mortgage rates stabilised at the beginning of 2023, they are starting to tick up again in anticipation of further rate rises this year to dampen inflation, so if you find a mortgage deal you like, you may want to act sooner rather than later. Find out more in our guide When is the best time to remortgage?
This table indicates the typical monthly mortgage payment in December for “average priced” properties in the UK over 10 years, assuming a five-year fixed mortgage offer over 25 years at a 75% loan-to-value.
| Year (data from December) | Detached house | Semi-detached house | Terraced house | Flat or maisonette |
| 2013 | £990 | £621 | £534 | £585 |
| 2014 | £1,050 | £653 | £566 | £633 |
| 2015 | £1,071 | £664 | £575 | £638 |
| 2016 | £1,065 | £660 | £570 | £641 |
| 2017 | £1,087 | £679 | £585 | £651 |
| 2018 | £1,107 | £693 | £590 | £653 |
| 2019 | £1,074 | £675 | £577 | £623 |
| 2020 | £1,206 | £752 | £647 | £672 |
| 2021 | £1,270 | £781 | £666 | £665 |
| 2022 | £2,041 | £1,262 | £1,063 | £1,028 |
Source: UK House Price Index, Bank of England
The figures put into perspective just how difficult buying a home in the UK has become. According to ONS, in December 2021, a monthly budget of £1,000 would have been enough to buy you an average semi-detached property in nearly two thirds of local authorities in Britain (assuming an LTV of 75%). However, by December 2022, you would only be able to afford an average semi-detached property in about 30% of areas with the exact same budget.
Additionally, upfront house prices were almost 10% higher in December 2022 than they were a year before.
Where can I get mortgage advice?
Whether you are getting out a mortgage for the first time, or if your fixed rate deal runs out soon and you are looking to remortgage, it’s really important to consider seeking mortgage advice. A good broker will be able to help you navigate the current market and find the best possible deal.
Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage. If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.