Homeowners face paying thousands of pounds more in interest over the lifetime of their mortgage following the Bank of England's latest interest rate rise.
The latest research by specialist property lending experts, Octane Capital, has revealed that the average homeowner looking to remortgage in the current market will pay over £23,000 more in interest over the lifetime of their new mortgage term.
The current interest rate of 5% is the highest seen in over 15 years since April 2008 when the base rate also sat at 5%.
READ MORE: Bank of England interest rate rise to 5% and what it means for you and your mortgage
According to Moneyfacts, the average rate for a five year fixed term mortgage now sits at 5.83%, up from 5.17% since the start of June.
Based on the current average house price of £286,489 and a 25 year term mortgage at a 75% loan to value, this means the average homebuyer is now facing a monthly mortgage repayment of £1,362 - £85 per month more compared to the start of the month.
Over the lifetime of their five year fixed mortgage term, this will see them pay £81,729, with £59,621 of this being interest on their mortgage at the current average rate of 5.83%. That’s an increase of £6,998 in interest paid over the five years when compared to those who committed to the same mortgage at the start of June at the lower rate of 5.17%.
However, it’s those looking to remortgage who are set to see the biggest increase in their mortgage costs. Five years ago, the average homebuyer secured a five year fixed term at an average rate of 1.99%.
This saw them pay £725 per month or £43,505 over the five year fixed term, with £15,704 of this total paid in interest.
Today, remortgaging to another five year fixed term on the remaining mortgage balance £143,465 at the average rate of 5.83% would see their average monthly mortgage repayment increase to £1,014 - a jump of £289 per month.
Despite borrowing less, the full cost of their mortgage during their second five year term would also increase to £60,829 - a £17,324 jump. A notable £38,821 of this £60,829 will be paid in interest meaning the interest paid on their second five year term will increase by £23,117.
Receive newsletters with the latest news, sport and what's on updates from the Liverpool ECHO by signing up here
