The average mortgage is up marginally from 2.84% to 2.99% between September and November, which is itself a 5% increase. However there are 2 completely different groups of mortgage holders. Those with Trackers and those without.
Last Summer I was mortgage approved with a rate around 3.75%. Since then there have been two 0.5% increases in the variable rate from that provider. An increase in interest payments of over 25%.
If I had bought at the start of last summer my monthly mortgage payment today would be 25% greater than it was on day 1. 25% is a lot.
Combined with the removal of Mortgage Interest Relief, monthly mortgage payments for a new buyer today could be anything up to 33% higher (guess) for the same mortgage amount this time last year.
The 5% they refer to is 2.99%/2.84% and not the increase in repayments.
If you’re on a repayment mortgage an increase of 1% in interest rates would increase your repayments by 10% (less at shorter terms) so the increase from 2.84% to 2.99% is a 5% increase in the rate but it would only increase mortgage repayments by approx. 1.5%
Similarly, your repayments would have increased by 10% and not 25% (again assuming a repayment mortgage)
If, for the sake of argument, I was on an interest only mortgage of 4% and the rate was increased to 5% my mortgage rate and my mortgage payments would have increased by 25%.
In my example I was talking about a first time buyer. In the first few years of your mortgage your payments are almost exclusively interest.
In my example my rate went from 3.75% to 4.75%. An increase of 26.66%. I rounded down for simplicity and to somewhat cater for capital repayments. That figure is a long ways off 10%.
I did explain that there are different segments in the market, differentiating between tracker holders and other mortgagees. I didn’t differentiate between those near the end of their term and those at the start as I, and the market, are only concerned about those at the start.