The most recent analysis by property finance experts, Octane Capital, has provided insights into the regional variations in the cost of monthly mortgage repayments across England, and highlighted where buyers might encounter the most substantial borrowing costs.
The study indicates that following the 13th successive base interest rate rise to 5%, the typical homeowner in England is currently borrowing £243,355, having made a 20% deposit of £60,839.
Based on a 25-year term at the average mortgage rate of 3.76%, this translates to a full monthly repayment of £1,252, or £763 for interest-only repayments.
However, borrowers in London are dealing with the most considerable expense, with the typical buyer facing a monthly mortgage repayment of £2,155 – a staggering 72% more than the countrywide average.
Second on the list are those in the South East, needing to borrow a significant amount, leading to a full monthly repayment of £1,624 – which is 30% above the countrywide average.
The East of England and the South West also surpass the national standard, with the typical homebuyer borrowing 16% and 7% more respectively, resulting in a monthly mortgage expense of £1,449 and £1,342 in each region.
Nonetheless, mortgage costs are more affordable than the national average in five of the nine regions of England.
The North East tops the list for affordability, where the average monthly mortgage repayment of £648 is a remarkable 48% less than the national standard.
The situation is similar across Yorkshire and the Humber where the average monthly mortgage repayment is £838, which is 33% below the national average. The North West (-30%), West Midlands (-19%) and East Midlands (-19%) also report significantly lower monthly mortgage repayments compared to the national average.
Jonathan Samuels, the CEO of Octane Capital, commented, “Given the significant regional differences in property values across the vast and diverse property market, it’s logical that areas where the need for borrowing is greatest, such as London, face the steepest monthly mortgage repayments due to the continual increase in interest rates.
It should be noted, however, that while some regions exhibit much higher house prices, affordability is contingent on earning potential. Therefore, despite lower house prices and corresponding mortgage costs in regions like the North East, it doesn’t imply that households are immune to the financial pressures currently exerted by the Bank of England.”