An interest rate rise to 6% would hurt homeowners, says Rightmove

Rightmove has warned that the average monthly mortgage payment for a household buying a first-time buyer home would increase to £1,302 if the average mortgage rate rose to 6%, as looked likely this week.

That is based on a borrower taking out a two-year fixed mortgage, at 90% loan-to-value (LTV).

The property portal says that this monthly payment would be 60% higher than those getting on the ladder at the start of 2022.

For two people buying a first home together and splitting the £1,302 payment, the monthly payment each of £651 would equate to 25% of their gross average salary, up from 15% at the start of the year.

The last time the average mortgage rate was 6% on a 90% LTV two-year fix was in May 2012, when the average asking price of a first-time buyer home was £142,686. Back then the average monthly mortgage payment on a first-time buyer home was £833, which was 21% of the average gross salary for two people splitting the payments

For a solo first-time buyer, the average lending criteria of 4.5 x their salary means they would need to be earning £45,000 to buy a home at the average first-time buyer price of £224,479. If rates rose to 6% this would equate to 35% of their salary, up from 22% at the start of the year

The average asking price of a first-time buyer home is now £224,479, making it £22,448 for a 10% deposit

Despite affordability challenges, demand for first-time buyer homes is up 27% on the pre-pandemic five-year average


Property industry reacts to Rightmove House Price Index


Homesearch EOS

Email the story to a friend


  1. Justsayin

    What a headline, it actually took Rightmove to tell us that, we’d never have guessed!!

  2. Charlie Lamdin

    A medal to RM for stating the bleedin obvious.

  3. WiltsAgent

    This assumes that house prices will remain at the same levels when plainly, if rates continue rising, prices will start dropping. As a by product making houses prices more affordable.

    Zero or near zero interest rates are not normal and have over inflated prices. A correction is long overdue.


You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.