Revealed - why now could be the right time to remortgage

New research by Revolution Brokers show that the average monthly cost of a variable rate mortgage has climbed by 13.3% so far this year.

The online brokerage service was able to accumulate these findings by analysing how the monthly cost of a variable rate mortgage with a 75% loan to value has changed and the cost each month after adjusting for inflation.

Mortgage rate changes

According to Mortgage Brokers, this time last year, those securing variable rate mortgages on a 3.61% rate on the average UK house price of £260,575 were repaying £990 per month.

After adjusting for inflation, this monthly repayment cost rose to £1,093. 

At the start of this year, the inflation adjusted monthly at a rate of 3.67% on the average UK house price of £272,833. Repayments then had a 2.3% increase that led them to climb to £1,118 per month.

In today’s market the average house price risen to £292,118 and the average mortgage rate for a variable rate product at a 75% LTV is 4.89%. 

The average homebuyer is currently paying 13.3% more than in January of this year for monthly repayments. That is £174 (15.9%) more than the cost of a monthly repayment this time last year even when taking inflation is applied.

Buyers who purchased at the start of the year on a variable rate product have seen the cost of their monthly repayments climb by 4.4% or £49 per month.

Founding director of Revolution Brokers, Almas Uddin, commented: “The average rate for a variable rate mortgage has climbed by over 1.2% since the start of this year alone and this is really only the tip of the iceberg with respect to increasing mortgage rates.”

“So while those who purchased with a variable rate mortgage at the start of the year may have only seen a marginal increase in their monthly repayments so far, they can certainly expect further hikes over the coming months.” 

“As it stands, rates remain fairly favourable and so now is the time to consider remortgaging if you’re in a position to do so, with a fixed rate product providing some protection over the impending escalating cost of borrowing.”