Buyers in London and the South are benefitting the most from a drop in average monthly mortgage payments and static house prices.
According to new analysis by Rightmove published ahead of the Bank of England’s interest rate decision due at midday today, buyers in London are paying an average of £181 less per month on their mortgages than a year ago. Asking prices in the capital have dropped 1.1 per cent over the last year.
Across Britain, however, the average monthly drop in mortgages was only £84, while in Scotland the drop is £23 a month on mortgages. House prices, meanwhile, have risen by 2.6 per cent.
In the South East, the change in mortgage payments has been £120 per month, and in the South West it’s £106 per month. However, in the North West, the saving is only £24, and in Yorkshire & The Humber it’s a £36 saving compared to last year.
Annual change in mortgage payments in every region
|
Region |
Average asking price |
Average asking price change year-on-year |
Average mortgage payment |
Average mortgage payment change year-on-year |
|
East Midlands |
£291,578 |
0.9% |
£1,240 |
-£54 |
|
East of England |
£418,837 |
0.2% |
£1,794 |
-£90 |
|
London |
£675,074 |
-1.1% |
£2,927 |
-£181 |
|
North East |
£194,737 |
0.5% |
£831 |
-£39 |
|
North West |
£270,275 |
3.2% |
£1,123 |
-£24 |
|
Scotland |
£199,146 |
2.6% |
£833 |
-£23 |
|
South East |
£479,982 |
-0.7% |
£2,073 |
-£120 |
|
South West |
£382,531 |
-1.3% |
£1,662 |
-£106 |
|
Wales |
£267,528 |
0.9% |
£1,138 |
-£49 |
|
West Midlands |
£293,645 |
-0.1% |
£1,260 |
-£66 |
|
Yorkshire and The Humber |
£258,568 |
2.0% |
£1,052 |
-£36 |
Assessing why the North-South disparity has been so pronounces, Rightmove property expert Colleen Babcock said: “Competition amongst sellers to find a buyer is more heated in London and the south of England, while higher stamp duty rates have hit these regions harder, both contributing to lower asking prices compared to last year.
“The result for buyers is improved affordability when combined with lower mortgage rates, and the higher rate of agreed sales compared to last year suggests many are taking advantage.”
In the country as a whole, the current average monthly mortgage payment is £1,506, down from £1,590. The average fixed mortgage rate, meanwhile, has come down from 4.99 per cent to 4.53 per cent over the last year, and the average asking price for a home is now £370,257.
Rightmove’s analysis is based on buyers purchasing a home at the average asking price, with a two-year fixed mortgage rate, and spreading the cost of the mortgage over 30 years.
Tom Bill, head of UK residential research at Knight Frank, put the change down to areas outside of London growing more appealing since the pandemic. “House price growth has been skewed away from London and the south-east in recent years and towards more affordable parts of the UK,” he said.
“As a result, those people feeling the pinch to a greater extent are living in areas where prices have risen more, a process that was accelerated by the pandemic and buyers re-assessing their work-life balance.”
Lucian Cook, head of residential research at Savills, points out that the increase in affordability in the South is still minimal when considering the prince-to-income ratios of recent years.
“London and the South of England have been at the sharpest edge of mortgage rate increases over the last couple of the years, so the recent fall in monthly costs will come as welcome news to homebuyers and movers in these regions.
“However, it’s important to view these decreases in the context of already stretched house price-to-income ratios, with average deposits as a percentage of income higher than the rest of the country. So while this may provide some breathing room, buyers still face significant barriers to affordability.”