Homeowners approaching the conclusion of their fixed-rate mortgage terms are finding themselves compelled to remortgage at elevated rates, resulting in an average monthly payment increase of £243, as per recent data from lender Barclays (BARC.L).
The statistics indicate that even though the Bank of England (BoE) base rate has decreased from a high of 5.25% to its current rate of 4.5%, many homeowners are not experiencing a decrease in their mortgage payments. A substantial 72% of mortgage holders are still on fixed-rate agreements, meaning their payments will only change once their fixed term ends.
Among those who have remortgaged in the past year, 14% reported an increase in their monthly payments. Almost 60% of these individuals experienced an average rise of £242.70 per month, which translates to £2,912.40 on an annual basis. This increase is likely attributed to obtaining a fixed-rate mortgage before mid-2022, when the rates were more favorable.
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Conversely, 10% of those who have remortgaged indicated that their monthly expenses had decreased — likely those who secured shorter-term products during the period of higher rates.
Barclays’ Property Insights further highlighted that expenditure on rent and mortgages saw a slight annual rise of 2% in January.
Sian McIntyre, managing director of mortgages and savings at Barclays, remarked: “The beginning of 2025 witnessed a minor increase in spending on mortgages and rentals; however, it is encouraging to see this has not adversely impacted consumers’ confidence in managing their payments. This month’s base rate reduction signals we are moving in the right direction.”
She also emphasized the increasing focus on housebuilding, stating that new developments are essential to enhancing the housing supply.
“Housebuilding is receiving greater attention, with a practical outlook on new developments acknowledged as critical to improving housing supply, along with the benefits they offer to homeowners and communities.”
“As we approach April’s upcoming stamp duty changes, potential buyers will seek ways to balance aspiration with affordability, with energy efficiency standing out as a key consideration in selecting the ideal home.”
Despite persistent challenges in the housing market, buyer confidence has dipped to a six-month low, with only 24% remaining optimistic. Increasing property prices and impending stamp duty changes are adding to the challenges. Half of renters (51%) see high property prices as the main barrier to homeownership, a rise of 11 percentage points since December. Likewise, 44% highlighted the high cost of a deposit as a major hurdle, increasing from 37% the previous month.