If you're thinking about buying your first home, there’s encouraging news on the mortgage front. While rates remain higher than they were a few years ago, they’ve come down significantly since peaking in July 2023. This means that monthly mortgage payments are now noticeably lower than they were at this time last year.

In July 2023, mortgage rates reached their highest levels due to ongoing inflation pressures. Since then, however, things have improved. Although mortgage rates are still higher than before the Bank of England began raising interest rates, they’ve come down enough to lower monthly payments substantially.

For example, if you have a 20% deposit, the current average interest rate for a 5-year fixed, 80% loan-to-value mortgage is 4.76%, down from the peak rate of 6.12% in July 2023. This drop means the average monthly mortgage payment has decreased from £1,096 last year to £949 this month, saving buyers £147 every month.

The amount you’ll save can vary depending on where you live and the price of your first home. For example, if you're buying in the East Midlands, the average asking price for a first-time buyer home is around £192,838, and monthly mortgage payments have dropped by £122 compared to last year. In the East of England, where the average home price is £273,670, monthly payments are down by £189.

If you're in London, where property prices are significantly higher, with an average asking price of £509,085, you could see your mortgage payments fall by £313 per month. Meanwhile, buyers in the North East, where average home prices are lower at £133,581, are saving around £79 a month.

Across the UK, the average first-time buyer home is priced at £227,191, meaning that the average monthly payment has dropped by £147 compared to July 2023.