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Homebuyers already benefiting from cheaper mortgage rates

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Research by specialist property lending experts, Octane Capital, has shown that current homebuyers are already benefiting from an increased level of mortgage affordability, with the average monthly repayment for those purchasing in September coming in £64 less per month versus July of this year. 


Octane Capital analysed the cost of a five year fixed rate mortgage for those placing a 25% deposit on the current average house price of £289,824 (July 2023 - latest available) and how this cost has changed in recent months as a result of reducing mortgage rates. 


The research shows that in July of this year, the average mortgage rate sat at 5.79%. As a result, the full monthly repayment required by the nation’s homebuyers came in at £1,373 per month, while the average payment for an interest-only mortgage was £1,049. 


In August, the average rate fell to 5.34%. This caused the average monthly mortgage payment to fall to £1,314, or £967 for those making an interest-only payment. 

By September, the average rate had fallen again to sit at 5.30%. As such, the average monthly repayment was £1,309, or £960 for interest-only. 


This means that those looking to purchase today are enjoying a cost saving of £64 per month compared to just a few months prior when making a full mortgage repayment, climbing to a saving of £765 over the course of the year. 

Those making an interest-only repayment are now saving £89 per month, or -£1,065 over the course of the year. 


CEO of Octane Capital, Jonathan Samuels, commented: 


“After reaching scary highs, and much industry discourse suggesting they would remain that way for a long time, mortgage rates have started to fall over the past three months. This is wonderful news for those coming to the end of a fixed term, who will welcome the reduced stress on their household finances. 


For buyers, it means things are becoming more affordable which aligns nicely with the upcoming autumn rush on the housing market. And sellers should be happy, too, because cheaper borrowing means buyer demand should increase after many postponed their property searches in fear of mortgage costs getting truly out of hand. 


We’re confident that, barring any major disasters or further governmental calamities, rates will continue to drop, albeit slowly, between now and the start of the new year.”


Data tables

Data tables and sources can be viewed online, here.

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