Homeowners face paying an extra £13,000 on their mortgages following Rachel Reeves’s high-spend Budget. The Telegraph has more.
Families are being warned to prepare for another five years of mortgage pain after official predictions revealed rates would jump while house prices continue to grow.
Yields on U.K. gilts – which have a knock-on effect on mortgage rates – have risen to a five-month high as investors reacted nervously to the Chancellor’s announcements.
Projections published by the Office for Budget Responsibility (OBR) said the average mortgage rate would jump from 3.7% in 2024 to 4.5% in 2027.
House prices are also expected to rise to £310,000 in 2028. The current average value of a U.K. home is £290,000, according to the Land Registry.
For those buying an average house at the average mortgage rate of 3.7%, assuming a 10% deposit, the monthly repayments would be £1,334.
But a 25-year mortgage at 4.5% on a home worth £310,000, assuming a 10% deposit, would have a monthly repayment of £1,550 – an increase of £216. This would be a difference of £12,960 in repayments over five years.
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