London homebuyers face £35,500 deposit increase due to rising mortgage rates

Rising mortgage rates, driven by instability from the conflict in the Middle East, have significantly reduced the buying power of homebuyers in London. According to research from Zoopla, the average five-year fixed mortgage rate has risen from below 4% in January to approximately 4.8% today.

In London, this shift means the average homebuyer must provide an additional £35,500 for a deposit to maintain the same monthly repayments they would have faced earlier in the year. This burden is more than triple the £10,200 increase seen by buyers in the North East. The impact is particularly acute for first-time buyers, who typically utilize longer mortgage terms and larger loans.

As affordability tightens, UK property sales have declined by 6% year-on-year. In response to the market slowdown, housebuilders such as Bellway and Barratt Redrow, alongside property portal Rightmove, are calling for government intervention, specifically urging a reduction in stamp duty for first-time buyers to stimulate demand.