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Mortgage rates have risen sharply and house prices have outpaced incomes over the past decade, so homeowners have had to borrow more to get on the property ladder.
Kim Kinnaird, mortgages director at Halifax, said a sharp rise in interest rates over the past year had pushed up mortgage repayments by around a fifth, which was “a big jump at any time, but particularly during a wider cost of living squeeze”.
Typical monthly mortgage costs have increased from £1,020 to £1,249 in the past year, based on a five-year fixed-rate mortgage with a 25-year term and a 25pc deposit.
Ms Kinnaird said: “We don’t yet know what the ‘new normal’ looks like for mortgage rates and house prices over the longer term. But we expect the market to rebalance as both buyers and sellers adjust their expectations to reflect higher costs and lower demand.”
House prices are widely expected to fall in the coming years as buyers adjust their budgets to higher mortgage rates. Oxford Economics, a research consultancy, said it expected prices to fall by 12.5pc from their peak last year.
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