The latest research by specialist property lending experts, Octane Capital, estimates that the nation’s first-time buyers could see the annual cost of their mortgage climb by £398 per year in 2024, with landlords also seeing a £367 year on year jump. 

Octane Capital analysed the current cost of repaying a mortgage for both landlords and first-time buyers and how this cost could change should mortgage rates fail to fall and house prices climb as forecast.

The general expectation is that house prices will increase by 3% over the course of 2024. This would see the average first-time buyer house price increase from £236,326, to £243,416, while the average landlord would see the average cost of investing climb to £293,499 from £284,950. 

Today, the average first-time buyer requires a mortgage of £200,877 having placed a 15% deposit of £35,449. With the average rate currently sitting at 4.4%, this equates to a full monthly repayment of £1,105. 

Should mortgage rates fail to reduce and house price rise as predicted, this would see the same first-time buyer looking to purchase a year from now paying a full monthly repayment of £1,051 per month. 

While a £33 monthly increase may not sound much, it amounts to an additional £398 per year. 

Similarly, the average landlord would also see the cost of their monthly repayments increase should they opt to wait until this time next year before purchasing. 

Currently, the average buy-to-let mortgage requires a full monthly payment of £1,020 or an interest only payment of £545 at the average rate of 3.06%. 

Should house prices increase by 3% as predicted, this would see the average cost of a buy-to-let mortgage increase by £367 per year if making a full monthly repayment, or £196 per year if making an interest only repayment. 

CEO of Octane Capital, Jonathan Samuels, commented:

“Market confidence is growing and buyers have been encouraged by both a freeze on interest rates and a reduction in mortgage rates. This has led to a surge in activity as they look to capitalise on the lower cost of borrowing before it’s too late. 

Those considering a purchase this year would be wise to follow suit. In recent weeks we’ve seen signs that swap rates are starting to creep up, which indicates that mortgage rates are likely to do the same. 

When you also consider that house prices are expected to rise by 3% this year, the decision to sit tight could be a costly one.

As our research shows, waiting until the end of the year could result in your monthly mortgage repayment increasing by hundreds of pounds a year.”

Data tables and sources

• Average house price data sourced from Gov – UK House Price Index
• Prediction for 3% house price growth in 2024 sourced from the Guardian
• Current mortgage rates for first-time buyers and buy-to-let mortgages sourced from Money Facts

Data tables and sources can be viewed online, here.

• 17% of all insolvencies were construction companies last year
• Construction insolvencies have outpaced all other UK sectors for the last three years
• Cancellation of Northern leg of HS2 hits confidence

The construction sector is experiencing the highest number of insolvencies of any industry in the UK, with 4,370 companies going bust in the year to the end of November 2023, representing 17% of all insolvencies*, says Mazars, the international audit, tax and advisory firm.

In 2022, the UK’s construction sector contributed 6% to the country’s GDP**. Construction insolvencies have consistently outnumbered any other sector for the past three years, with 2022/23’s figure showing a 7% increase from the 4,086 companies that went insolvent in 2021/22 and a 76% rise from 2,481 2020/21.

Mazars says that the construction sector has been hit hardest with a perfect storm of high material and labour costs. The impact of rising borrowing costs has further impacted profit margins on both live and pipeline development projects. 2023 saw mortgage rates reach a 15-year high, putting a dent in consumer confidence and taking the heat out of the dramatic price rises in residential housing over recent years.

Mark Boughey, Partner in the Restructuring Services team at Mazars, says: “There are now on average a dozen building companies going under every single day in the UK. This is an immensely difficult period for the construction sector.”

“One problem is that the commercial viability of a lot of today’s projects were assessed three or four years ago, with fixed price contracts often being negotiated – since then, costs have spiralled, while buyers’ appetite has taken a dive. Construction contractors operate on very tight margins at the best of times – the sector is really being squeezed at both ends right now.”

Insolvencies in the sector have been highest in specialised construction activities, such as demolition, electrical and plumbing, representing 58% of all insolvencies in the sector over the last twelve months.

“We saw a number of bigger contractors filing for insolvency 12 to 18 months ago and now those failures are being felt downstream in the supply chain,” says Mark. “Sub-contractors aren’t getting paid on time or to the agreed levels and, as a result, are now starting to experience their own financial problems. The impact of failures in the sector cuts both ways though – when smaller companies fold, it can cause major delays for the main developers in completing projects.”

“Whilst some of the headwinds around increasing borrowing costs and material prices have eased, we’re unfortunately likely to see these difficulties persist through 2024 and into 2025.”

* Source: Insolvency Service

** Source: United Nations Economic Commission for Europe, Share of construction in GDP, 2022