Navigating the complexities of mortgage repayments can be daunting, but understanding the average costs can provide a clearer picture of what to expect. In this guide, we explore the average mortgage repayment in 2024 and provide insights into the broader landscape of mortgage payments across different house prices in the UK.
What is the average mortgage size in the UK?
In the United Kingdom, the average size of a new mortgage taken out in the first three months of 2024 was £180,463 (showing a slight decrease from an average of £189,445 since the end of 2023.) Additionally, the average outstanding mortgage debt per household in the UK stands at approximately £131,421. Keep in mind that these figures can fluctuate based on individual circumstances and market conditions.
With this in mind, learn what the average mortgage repayment on a 200k mortgage is in 2024. Alternatively, continue reading to learn more about the overall mortgage payment average for different house prices around the UK.
Expert opinions on the average mortgage size
In 2023, the trend in the UK mortgage landscape revealed an average borrowing size that aligns with home buyers not stretching themselves financially as they are more worried about their own finances than they have been in previous years. We see this trend carrying on into 2024 with homebuyers being prudent and even delaying moving or buying a home once they see more financial stability in interest rates and the UK economy. – Steve Roberts (Founder of YesCanDo Money)
What is the average mortgage payment UK?
ONS data reports that the estimated monthly mortgage payment in the UK for 2024 is £1,293. However, remember this is just an average of all mortgages across various regions, property types, and loan terms, and individual payments can vary significantly based on factors like loan amount, interest rate, and mortgage duration.
Additionally, our findings reveal that average monthly payments now surpass rental costs in the UK, a shift from the traditional pattern where owning typically incurred lower monthly expenses than renting. The average rent in the UK is currently £1,262 per month.
Expert opinions on the average mortgage payment
It’s our mortgage advisor’s observations that most people believe that the monthly mortgage payments tend to be at a similar cost to current rental payment costs. The truth is that in recent years calculating an average monthly mortgage repayment is much more complicated in 2024 with both mortgage rates and property rentals increasing well above inflation
With interest rates rising in both 2022 and throughout 2023, at YesCanDo Money we believe that both the Bank of England Base Rate and Average Mortgage Interest Rates have climbed to the highest point — signifying a likely plateau for monthly mortgage payments during the second half of 2024. – Steve Roberts (Founder of YesCanDo Money)
Important considerations
It’s important to approach average figures with caution, particularly when it comes to mortgage repayments. Calculating your specific mortgage costs isn’t straightforward without considering personal factors like your income and the prevailing interest rates. The mortgage market is diverse, with thousands of products, each with unique costs and variables. These factors significantly influence the overall cost of the loan, including the interest and the monthly repayments.
Therefore, while average costs can offer a general idea, they often don’t reflect individual circumstances. In the following section, we delve into the various factors that affect mortgage costs and explore strategies to potentially reduce both the average mortgage interest rate and monthly repayment amounts.
If you’re in the process of seeking a mortgage or curious about how much mortgage you could borrow, our team is here to assist. We can provide a more tailored estimate by examining your specific situation and identifying mortgage options that best suit your needs.
What determines the cost of a mortgage?
The average costs of mortgages depend on a number of variables.
These include:
- The type of mortgage product
- The mortgage applicant’s personal circumstances
- The interest rate being offered by the mortgage lender
- The length of the mortgage term
- The amount the applicant puts down as a deposit
- The various fees that add to the overall cost of the mortgage
- The average price of local properties
Let’s take a look at some of these variables and how they relate to the cost of a mortgage.
Average mortgage interest rates
Mortgage rates vary between one mortgage lender and another so there is rarely any consistency. The interest rate you will be subjected to will be based on the promotional deal offered by the lender, the Bank of England base rate, your personal circumstances, the size of your mortgage deposit, and the type of mortgage that you have chosen.
Which type of mortgage has the lowest interest rate?
The average mortgage interest rates rise and fall all the time so your interest payments (and overall mortgage repayment cost) will depend on the mortgage type you have selected.
These include:
- Variable rate mortgages
- Tracker mortgages
Fixed-rate mortgage deals
If you choose a fixed-rate mortgage deal, the interest rate will stay the same for a fixed period of time. This can be good news as you will know how much you will need to set aside for your mortgage repayments. However, if the interest rate falls, you won’t benefit from any savings as the average mortgage cost of your mortgage will still be tied to the fixed rate.
If you choose a variable-rate mortgage, the interest might be higher or lower than that on a fixed-rate mortgage, depending on the rate set by your lender. As the lender can increase or reduce their interest rate at any time, there is no guarantee that you will always be on the most affordable mortgage deal.
Tracker rate mortgages
If you opt for a tracker mortgage, the interest rates will depend on the Bank of England base rate. As such, the amount you have to pay could vary depending on whether the base rate rises or falls.
Repayment or interest-only mortgages
Your average mortgage payment will also depend on whether you opt for one of these mortgage products…
- Repayment mortgage
- Interest-only mortgage
With an interest-only mortgage, your monthly repayments are only made up of interest. However, interest rates are usually higher on these types of mortgages and you will still have to pay the capital at the end of the mortgage term.
Which type of mortgage is best for me?
When basing a decision based on interest rates, it’s wise to compare the deals being offered by different mortgage providers. However, the advertised rate might not be the actual interest rate that you are offered as the lender will also take your personal circumstances into account when determining what your average mortgage payment will be on a month-by-month basis.
This is frustrating, we know, but if you want to benefit from the lowest mortgage interest rates and cheapest mortgage overall, get in touch with our team. We will consider your personal circumstances and the various factors that determine interest rates and will look for the mortgage lenders that are able to offer the best possible deal that you are eligible for.
Average mortgage interest rates
Interest rates have become more steady as we close 2023 and some have even dropped. However, interest rates remain to vary massively depending on the rate type i.e. whether you chose a fixed rate or variable rate and the length of rate you chose.
The loan-to-value (LTV) ratio is a key factor in mortgage rates. For instance, a 90% LTV mortgage loan requires a 10% deposit. Generally, lower LTV ratios offer better interest rates, although this can pose challenges for first-time buyers who may not have the means for a substantial deposit.
Keep in mind that these rates are indicative and actual interest costs can vary based on several personal factors.
Let’s explain this further with current (2024) interest rate examples:
- A five-year fixed-rate mortgage with a 95% Loan-to-Value (LTV) ratio has an interest rate of 4.96%.
- Choosing a two-year fixed-rate mortgage instead, but still with a 95% LTV, results in a slightly higher interest rate, averaging at 5.54%.
- The Loan-to-Value (LTV) ratio can significantly affect the mortgage rate. For example, a five-year fixed-rate mortgage with a lower 60% LTV has an average interest rate of 5.54%. This is higher compared to the 4.96% interest rate for a similar mortgage but with a higher 95% LTV.
Looking at past interest rates
Since early 2022 the Bank of England’s base rate has increased 14 times to address rising inflation, which in turn affects mortgage interest rates.
The accompanying graph illustrates the trend between the Bank of England’s base rate and fixed mortgage rates, highlighting a significant correlation. During the COVID-19 pandemic, fixed rates dropped to historic lows, mirroring the Bank’s lower base rates aimed at stimulating economic activity. As the situation stabilised, the graph shows a steady increase in fixed mortgage interest rates, corresponding with the Bank’s rate hikes to counter inflation and support economic recovery. This pattern underscores the direct impact of central bank policies on lending rates.
Other factors that affect your mortgage payment
There are certainly other factors to consider when talking about the average UK mortgage payment. We list them below and delve into how they can make a difference to the average monthly payment on your mortgage.
The average mortgage term
The length of a mortgage will also affect the overall monthly cost of the mortgage.
The average length of residential mortgage terms is 30 years but you can apply for a longer or shorter mortgage if you prefer.
The shortest mortgage terms are around 5 years in duration and the longer mortgage terms are around 40 years.
Mortgage applicants usually opt for longer-term mortgages as this is one way to reduce their average monthly mortgage payment. However, they will still pay more in the long term as a longer period equates to more interest over the term of the mortgage.
Mortgage deposit
To prove to the mortgage lender that you’re able to cover the cost of the loan, you will need to give them a few assurances. It is hard to say what credit score is needed to buy a house. However, having a good credit history is one way to win their favour and so too is the size of the deposit you put down as a deposit for your property. The size of your deposit will determine how big your mortgage will be.
The more you can use a deposit, the better, as you will then have to borrow less from the lender. You will be eligible for more affordable loan-to-value mortgage deals with a lower interest rate and reduced mortgage payments on your remaining balance.
This isn’t to say you won’t be offered good deals with a smaller deposit but to reduce your average mortgage repayment, bigger is always better!
Of course, you shouldn’t stretch yourself beyond your means, so if you can’t afford to put down a large deposit, you should use whatever funds you have at your disposal.
If you are struggling to raise a deposit for your mortgage, you may be able to access local government schemes, including help-to-buy schemes and mortgage guarantee schemes if you are one of the many first-time buyers looking to get on the property ladder.
You could also ask a family member to give you a gifted deposit as you could add this to your savings to make up a larger deposit. You would then benefit from smaller mortgage loans with cheaper mortgage repayments.
The value of the property
The higher the property value, the more expensive your mortgage will be unless you can pay off a good portion of this with your deposit.
Remember that the average UK house price is only one factor that will determine the size of your mortgage. Other variables will also have an effect on the total cost of your mortgage and your monthly payment, such as…
- Mortgage type
- Interest rate
- Loan to value ratio
- Length of the mortgage term
- Deposit size
How can I reduce the size of my monthly mortgage repayments?
If you want to benefit from lower monthly payments on your mortgage, there are a number of things you can do.
- Increase your deposit
- Increase the overall term of the mortgage
- Improve your credit score if you have a bad credit rating
- Consider interest-only mortgages (you will still need to pay the capital at the end of the mortgage term)
- Pay off a lump sum of your mortgage when finances allow (be aware that some lenders will put a cap on how much you can overpay)
- Choose a region in the UK with a cheaper average house price
For more advice on reducing your mortgage costs, and your average monthly mortgage payment as well as getting an answer to how much can I borrow for a mortgage, get in touch with our team. We will look for affordable deals on the mortgage market that suit your financial position.
What is the average UK house price?
According to the Office of National Statistics, as of January 2024, the average house price in the UK was £282,000, which is £2,000 lower than 12 months ago.
In recent years, there has been more variability in UK house prices. After a period of steady growth, 2022 experienced fluctuations. The highest point was in November 2022 with an average price of £292,674, followed by a downturn. By December 2022, the average price had decreased to £289,844.
The trend of fluctuation became more pronounced in 2023. Early in the year, there was a further decline in prices, with the average falling to £283,635 in March. However, there was a slight recovery in the second quarter, with prices rising to £285,010 in April 2023 and reaching £287,546 by June 2023. This recent pattern indicates a move away from the consistent growth seen in previous years, signaling a period of more variable and less predictable market behavior. The end of 2023 saw a slight dip in the house price cost, decreasing 1.86% from £290,353 in September 2023 to £284,950 in November 2023.
RICS UK Residential Survey 2023
The December 2023 RICS UK Residential Survey indicates a rejuvenating housing market, with increasing activity and optimism for 2024.
Key highlights include:
- Activity improvement: December saw a rise in market activity, continuing the trend of falling mortgage rates.
- Sales expectations: Short-term sales expectations rose to 12%, with a positive longer-term outlook signaling a move towards a more stable market.
- Buyer enquiries: There was a slight increase in new buyer enquiries, reaching -3% in December, up from -13% in November.
- House price pressure: The house price gauge improved to -30% in December, suggesting easing downward pressure on prices.
- Completion times: The average time to complete a sale reduced to 18 weeks from 20 weeks in September 2023.
- Lettings market: Tenant demand increased, contributing to rising rental prices due to a continuous shortage of landlord instructions.
- Rental projections: Near-term rent increases are expected, with projections of nearly 4% growth over the next year and an average of 5% annually over five years.
- Market outlook: Experts predict a limited but positive recovery in sales volumes and activity for 2024, buoyed by easing mortgage rates, though the lending climate remains somewhat restrictive.
Overall, there’s cautious optimism for the UK property market, with signs of stabilization and a gradual recovery anticipated in 2024.
Average mortgage UK repayments
Below are our guides that cover the repayments for a selection of specific mortgage amounts:
- £130,000 mortgage
- £150,000 mortgage
- £170,000 mortgage
- £180,000 mortgage
- £200,000 mortgage
- £250,000 mortgage
- £300,000 mortgage
- £350,000 mortgage
- £400,000 mortgage
- £500,000 mortgage
- £600,000 mortgage
- £700,000 mortgage
Frequently Asked Questions
What is the average monthly mortgage payment UK?
The average monthly mortgage payment in 2023 is £664 per person in the UK. However, remember this is just an average of all mortgages across various regions, property types, and loan terms, and individual payments can vary significantly based on factors like loan amount, interest rate, and mortgage duration.
How much per month is a 300k mortgage UK at 6% interest over 30 years?
For a £300,000 mortgage at a 6% interest rate over 30 years, the monthly payment would be approximately £1,798.
How much is a 100k mortgage per month UK at 6% interest over 30 years?
For a £100,000 mortgage at a 6% interest rate over 30 years, the monthly payment would be approximately £599.
What salary do I need for a 500k mortgage UK?
To secure a £500,000 mortgage, you generally need an annual salary of around £110,000, as lenders typically offer loans up to 4.5 times your income. However, it's important to note that salary requirements may vary with different interest rates, terms and lenders.
How much is a mortgage on a 200k house UK?
For a £200,000 mortgage at an average interest rate of 6% over a 30-year mortgage term, the monthly payment would be approximately £1,199.
How much is mortgage on a 300k house UK?
For a £300,000 mortgage at an average interest rate of 6% over a 30-year mortgage term, the monthly payment would be approximately £1,798.
What is the average mortgage amount in UK?
As of the first half of 2023, the average mortgage value in the UK is around £184,376, decreasing from an average of £195,788 since September 2022.
Working out the cost of your mortgage with YesCanDo Money
As you will now understand, the average mortgage cost (and the average monthly mortgage payment) is dependent on a range of factors, from housing prices to the amount you put down as a deposit.
To make sure you benefit from an affordable mortgage, at the lowest possible cost (including interest) to reduce your monthly repayment, get in touch with our mortgage team. As we’re not a lender, we are unbiased in our approach and can tailor our services to meet your particular needs. You can find more information on how to get a mortgage here.
Our mortgage advisers will search the market for the mortgage lenders that offer the lowest mortgage rates and will advise you on what you can do to gain access to residential loans with the lowest monthly payments. If you’re looking how to remortgage, we can also compare deals so you know whether to stick with the same lender or move to a new lender with lower interest charges.
Get in touch using the contact details on our website and begin your journey towards getting affordable monthly repayments with our expert team.
