Rising mortgage rates are now likely to see the average annual cost of a mortgage repayment consume 27.9% of average household income, according to research by House Buyer Bureau.

The figure represents a 3.1% increase due to the latest interest rate rise, HBB said.

The company analysed the current cost of repaying a mortgage, the proportion of household income to cover the cost and how this is expected to change with the Bank of England base rate now at 3%. The research found that prior to the 0.75% hike in November, the average homebuyer purchasing via a variable rate mortgage was repaying £1,399 per month – a total repayment of £16,790 per year based on an average mortgage rage of 5.10%.

With the current average household income at £67,784, the average household is currently paying 24.8% of their annual income to cover the cost of their mortgage, the analysis revealed.

However, with the base rate increasing to 3%, the average mortgage rate available to those purchasing with a variable rate mortgage is forecast to climb to an average of 6.34%, pushing the annual cost of their mortgage repayments to £18,917. As a result, they will be required to spend 27.9% of their annual earnings on covering the cost of their mortgage.

“A 3.1% increase in the proportion of household income required to cover the cost of repaying a mortgage may not seem like much, but for the average home it equates to a jump of over £2,000 per year and at a time when we’re already stretched to breaking point with the increased cost of living,” said Chris Hodgkinson, HBB managing director.

“For many homebuyers, this increased cost is likely to be one hurdle too many when it comes to realising their dreams of homeownership and this will inevitably have an impact on the property market and house prices,” he added.

The analysis found that at county level, those in Devon and Greater London are set to see the biggest rise in proportion of household income required to cover the cost of repaying a mortgage, with an increase of 4.2%.

“With buyers no longer able to stomach the cost of borrowing, sellers will have little choice but to adjust their asking price or spend months on end with little to no interest in their home,” Hodgkinson added.

“Either way, we can expect the huge rates of house price growth seen in recent years to continue to fade over the coming months as the market adjusts to the new reality we have been presented with due to soaring interest rates.”