"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"
- Colleen Babcock - Rightmove
Ahead of the Bank of England’s interest rate decision at 12:00 pm on Thursday, new analysis from Rightmove shows that buyers in London and the south of England are benefiting most from improved affordability due to static house prices and lower mortgage rates.
Across Great Britain, the average monthly mortgage payment is now £1,506, down £84 from £1,590 a year ago. The average asking price for a home is £370,257. The analysis assumes buyers take a two-year fixed mortgage and spread the cost over 30 years at the average asking price.
Regional differences mean that affordability gains are uneven. In London, average asking prices are 1.1% lower than last year, meaning someone buying at the average asking price could save £181 per month. Buyers in the South East save £120, while in the South West the saving is £106 per month.
By contrast, in Scotland, where average asking prices have risen 2.3% compared with last year, the typical buyer only saves £23 per month, as price rises offset lower mortgage rates. In the North West, monthly savings are £24, and in Yorkshire & The Humber, £36.
The average two-year fixed mortgage rate has fallen from 4.99% last year to 4.53% now, contributing to these savings.
“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," explained Colleen Babcock, Rightmove’s property expert.
"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. However, it’s still much more expensive to purchase a home in London and the south of England compared to other areas of Great Britain, so affordability is still stretched despite the increase in purchasing power.”
Matt Smith, Rightmove’s mortgage expert, added, “We’re widely expecting a hold in the Bank Rate today. It will be particularly interesting to see how the Bank votes and its wider commentary around today’s decision to get a sense of how the next couple of months could play out. Although mortgage rates have trickled up in recent weeks as mortgage financing has become more expensive, we’re still seeing appetite from lenders to do business in what is typically a busy period for them.”
Mary-Lou Press, President of NAEA Propertymark, comments, “Average house prices have risen by over £40,000 in only five years, and in London specifically by around £90,000 alone. Therefore, a cooling, especially in areas across the south, will be welcomed by many and is due, in part, to ceiling prices being met because of the stretching of affordability for many people.
“A slow tapering in interest rates has allowed lenders to introduce more competitive mortgage products and has decreased the monthly cost for those with variable or tracker mortgages, allowing them to refinance to lower rates, and making it easier for homeowners to afford larger or more expensive properties by making monthly payments cheaper.”
