The true cost of servicing a mortgage has increased by a third is just over three years according to research from new online mortgage company mform.
The company which launches into the mortgage market today say the average annual cost of a mortgage is around £6,284, compared to £4,711 three years ago.
It says the main reasons for the growing cost of mortgages are rising property prices and increasing rates on home loans. The average mortgage rate today is 5.41% compared to 4.29% three years ago and there has been a significant increase in the size of mortgage application and exit fees.
The annual cost of servicing a mortgage has grown steadily in recent years from £4,711.20 in 2003 to £5,054.40 a year later, £5,928 in 2005 and £6,284 today.
Mform claims there are now around 1.38m people who are spending over £1,000 a month on their mortgages with 55% of these live in London, where property prices are at their highest.
Eamonn Rice, chief executive of mform says: “Compared to last year, house prices have increased by around 7.7% and with the possibility of a further rise in the Bank of England base rate, the size and cost of a mortgage will continue to rise.
But Rice adds consumers should be willing to shop around more arguing the difference between the most competitive and expensive fixed rate products is around 1.26%, which could save a typical first-time buyer around £1,360 a year.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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