Its Mortgage Affordability research reported that the annual increase is up by 0.7 per cent from August 2004 to August 2005. The average mortgage repayment increased from £502 a month to £512 from July to August 2005. The research also revealed that London has shown the biggest regional increase, from 22.7 per cent in July 2005 to 23.4 per cent last month.
Andy Gray, head of mortgages at Woolwich, said the cost of mortgages has been stable for some time but borrowers should expect the odd blip along the way.
He said: “There are reasons why there has been a jump and historically it tends to correct itself later in the year. Following the cut in interest rates most variable rates were reduced at the beginning of September
and many people are on fixed rates which won’t change and therefore won’t have been impacted by the August cut.”
Gray added that July and August are popular times for taking out new mortgages and the low rates of past years means that many will be coming to the end of cheap deals and either going onto SVR or remortgaging onto today’s higher rate products. “This leads to higher payments and hence pushes the mortgage affordability ratio upwards,” he explained.
Kevin Morgan, managing director of Consilium Financial Planning, agreed. “Many two-year fixed rate deals taken out at historically low levels have been finishing over the last few months. The onus is on advisers to warn of a degree of uncertainty to ensure clients are aware of the difference just 25 basis points can make,” he explained.
