Halifax issues £1,060 warning to customers who are paying off mortgage

Halifax has issued a mortgage warning as customers face having to fork out over £1,000 on their repayments still. Halifax, the country’s biggest mortgage lender, compared typical house prices to average earnings across the UK amid the Cost of Living crisis.

The number of new mortgages agreed recently reached its highest level in two years – residential property purchases are down by around a third compared to 2021, when interest rates were at a record low of 1.3% on average, compared to 4.1% in September this year

Typical monthly new mortgage costs have fallen by about 9% over the last year, from £1,116 to £1,060. That’s based on the typical monthly cost of a 5-year fixed rate mortgage, with a 30-year term and a 25% deposit (average interest rates of 5.2% and 4.1% respectively). Based on the average UK full-time income, that equates to mortgage costs as a percentage of income falling from 33% to 29%, its lowest level in over two years.

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Amanda Bryden, Head of Halifax Mortgages, said: "Housing affordability has improved over the past year, thanks to stabilising property prices, strong wage growth, and easing interest rates. That’s great news for first-time buyers and existing homeowners looking to remortgage or move up the property ladder.

“However, while homes are becoming more affordable, the progress has been gradual. Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.”

Ms Bryden, Head of Halifax Mortgages, said: “While national house price figures often grab the headlines, it’s crucial to remember that the property market varies significantly at a local level. The most sought-after areas tend to have the highest prices, and local developments, such as improved transport links or job opportunities, can all help to drive demand.

"Buying a home is one of the best financial decisions many of us will ever make, offering greater financial security and better retirement options. For home buyers and movers, it often pays to be flexible with the location you are looking at, as exploring nearby neighbourhoods can sometimes offer better value for money.

"For those struggling to find the funds to take that first step onto the housing ladder, engaging early with a mortgage advisor or broker is always worthwhile. Navigating the home buying journey and mortgage market can be complex, but they can help you understand your budget, the support options available through various government and lender schemes, and the range of products on offer.

“For example, shared ownership can be a great option for first-time buyers. It allows you to purchase a share of the property’s market value rather than the entire home, making it a more affordable way to step onto the housing ladder and giving you the benefit of growing your equity share if the property goes up in value. This means you could have more deposit to put down when you make your next move.”