The cost of mortgage repayments could climb by £2,500 a year if interest rates keep going up, adding pressure to UK households already struggling with the cost of living crisis.

MORTGAGE COSTS COULD RISE by £2,500 a year if interest rates keep going up, adding pressure to UK households already struggling with the cost of living crisis.

MORTGAGE COSTS COULD RISE by £2,500 a year if interest rates keep going up, adding pressure to UK households already struggling with the cost of living crisis.The cost of mortgage repayments could climb by £2,500 a year if interest rates keep going up, adding pressure to UK households already struggling with the cost of living crisis.Buyers are facing average rates of 3.37% for a 5-year fixed-rate homeloan now, compared to 2.64% in December on a £250,000 loan, with a 25% deposit – increasing the annual cost of a loan by more than £870, according to a report by property site Zoopla.If 5-year mortgage rates continue to rise, taking them to around 4.62% – levels last seen in April 2010, the annual cost of a mortgage repayment would climb by £2,500 a year compared to December 2021, the report warns.This scenario is based on an increase in base interest rates to 2.5%, which isn’t that far off. The Bank of England has said it is ready to “act more aggressively” to rein in inflation and has stuck to its series of gradual increases in borrowing costs, raising rates by a 25 basis points to 1.25%.UK interest ratesThis week, governor Andrew Bailey did not rule out raising rates by 50 basis point at the next meeting, saying that the decision is still a month away.Higher borrowing costs will start to impact new buyers as the market shows signs of cooling off, Zoopla said.The average length of time it takes to sell a home is increasing, in further signs that the housing market is starting to soften slightly.Property website Zoopla said across the UK, the average time between a home being listed and a sale being agreed was 22 days in May, up from an average of 20 days in March.It identified the South West of England as the fastest-moving market, with the average time between listing and agreeing a sale standing at 19 days.This reflects the high levels of demand in the South West since the start of the coronavirus pandemic, as some buyers make a move to prioritise access to rural and coastal settings, Zoopla said.Bristol, South Gloucestershire, Plymouth, Swindon and Exeter are particularly fast-moving markets, it added.At the other end of the spectrum, homes in London are staying on the market longest typically, with 35 days between a listing and an agreed sale.The average time taken from searching for a home to exchange, at which point the buyer can move in, is around five and-a-half months, Zoopla said.Read more: Average UK house price increased over £26,000 but market is cooling“We do expect buyers to become more price sensitive leading to fewer sales and lower price growth,” the report said.Grainne Gilmore, head of research at Zoopla, said: “Mortgage rates are likely to continue to climb so locking into a rate shortly could save hundreds over the longer-term.“There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply, but the increasing cost of living, increasing mortgage rates for buyers and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”Nick Leeming, chairman of estate agent Jackson-Stops, said: “It’s unsurprising to see the South West market going against the cooling tide.“Our Exeter office saw a near 40% uplift in buyer inquiries in May, heavily outpacing the level of instructions there. This allowed some sellers to be more bullish in their requests – pushing up competitive bids and testing the agility of buyers for a quick move.” yahoo