The average mortgage interest rate increased to 3.15 per cent in June, rising for the fifth month in a row.
New figures from the Council of Mortgage Lenders (CML) show that although the current rate remains a long way short of the rates witnessed in the start of the recession (such as 5.89 per cent in October 2008), there’s a definite trend upward over the last six months.
And conveyance LMS says that trend will continue, with potential impacts on affordability levels for homeowners.
Based on the 3.15 per cent mortgage rate figure, annual remortgage repayments now account for over a fifth (21.7 per cent) of household income.
That’s slightly higher than last month when they accounted for 20.7 per cent, but is still marginally lower than the typical rate for a new purchase mortgage. New purchase mortgage holders spend an average 21.9 per cent of household income on mortgage repayments.
However, the average monthly household income for all new mortgages rose by 2.3 per cent in June, to an average income of £43,938, according to the CML.
LMS chief executive Andy Knee says affordability remains the key to the property market.
“With the average amount of equity released through remortgaging falling by 4 per cent from last month, it is apparent that more stringent rules and less competitive rates are taking their toll.
“That said, it is still possible for customers to get a good deal if they hunt around – with 60% of those who remortgaged doing so to lower their mortgage rate.
“We expect uncertainty surrounding a base rate rise will also encourage a surge in remortgage activity, especially later on in the year as more customers look to fix rates while they can, and before rates creep up any further.”
