Mortgage rates rise in May
The latest data from the Bank of England revealed that overall average mortgage rates for new business increased significantly in May 2022.
What the Bank of England said
The average floating mortgage rate for new business 2.16%
The average fixed mortgage rate for new business 1.95%
The average overall mortgage rate for new business 1.96%
Whilst unwelcome, it is no surprise that in the face of increases in the underlying Bank of England Bank Rate that mortgage rates follow suit.
The average new business mortgage rate for floating rate mortgages increased by 5.4% in May to 2.16% and new business fixed rates rose by 7.7% to 1.95%.
As illustrated in the chart above the trajectory for mortgage rates has been consistently steep for most of the year so far.
The impact of rising mortgage rates and house prices on affordability is clear. The chart below shows the monthly mortgage payments for the average house price with a mortgage at the overall average mortgage rate for new business, assuming an 80% loan to value
The mortgage payment has risen from £797 before the COVID-19 pandemic to £974 today an increase of £177 per month or 22.2%. Time will tell if home buyers can sustain the continued growth in house prices in the face of rising mortgage costs.
To see how much your mortgage might cost, you can use our mortgage payment calculator