Renters and House Buyers can't afford Capitalism

 

Two reports from YahooFinance highlight the financial misery capitalism is inflicting upon both private renters and those with mortgages.

‘New data shows London rents approaching the total average take home pay of residents. Average London rents are approaching 80% of residents' average monthly pay, as prices head past the £2,000 mark. The average salary of a London resident is just over £41,000, according to recent data published by Statista. After tax, this comes out to around £2,600 a month.

Meanwhile, new research by Homelet has shown London rents reaching an average £2,039 per calendar month – about 78% of average pay after tax.

Rents have also risen outside the capital, with average UK prices now hitting £1,213, a 1.2% from last month’s average of £1,199.

Excluding London, the average price of rent in the UK is £1,016 per calendar month, up 1% from the previous month and up 9.5% from the previous year.

The study put Scotland as the highest monthly gainer with rental averages rising by 2.6%.

The UK’s cheapest rental area, the North East, saw another dip, dropping 2.0% month-on-month to £632.’

‘More than 2.5 million UK homeowners who will have to renegotiate their mortgage over the next two years face paying £9bn more as interest rates jump.

With the Bank of England (BoE) now more likely to raise rates even higher than previously thought, the Cebr said it now expects the two-year (75% loan-to-value) mortgage rate to tick up and average 5.1% in 2023.

This means the 2.5 million mortgages that have been or are due to be renegotiated over 2023 and 2024, will cost several pounds more each month as cheaper rates have vanished from the property market.

The cost of some mortgages have risen by up to 3.5 percentage points for some households. This adds on top of the estimated one million already exposed to mortgage increases because of their variable rate deals.

The Cebr is expecting mortgage rates to average 5.1% in 2023 and 4.6% in 2024, bringing even more financial misery to already struggling UK households.

“Cebr estimates that mortgage holders looking to renegotiate their deal in the next two years will face a hefty £8.7bn increase in their payments as a direct result of tighter monetary policy,” it said.

London will see the largest rise in aggregate cost for refixers, with mortgage costs up by £1.8bn over 2023 and 2024, a symptom of the £530,000 average price for a home in the capital compared to the UK average of £282,000.

Meanwhile, refixers in the South East will see the next highest rise in payments, up £1.7bn in 2023. This is partly due to the higher-than-average house prices but also down to the fact that the region held the largest share of all mortgages in the UK in 2022, at 15%.

At the other end of the scale, Northern Ireland and the North East are expected to see the lowest increase in mortgage payments for those due to refix up to the end of 2024. Cebr estimates refixers in Northern Ireland will see a £126m increase in mortgage costs, while in the North East this increase will amount to £159m.

https://uk.finance.yahoo.com/news/london-rents-78-of-average-pay-102450038.html?guccounter=1

https://uk.finance.yahoo.com/news/uk-households-pay-more-mortgage-costs-surge-230149970.html