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Londoners have seen their buying power plummet more than anywhere else in the country thanks to rising mortgage rates, new research from Zoopla shows.<\/p>\n
The average five-year fixed mortgage rate<\/a> is around 4.8 per cent today for a new 75 per cent Loan-to-Value (LTV) mortgage, up from below 4 per cent in January. <\/p>\n A UK homebuyer who could afford a \u00a3200,000 mortgage at the beginning of the year, for example, can now borrow around \u00a3182,000 for the same monthly repayment, representing a nine per cent reduction in buying power.<\/p>\n Alternatively, to keep monthly repayments the same, a buyer would need to add \u00a318,200 to their deposit on a property. <\/p>\n In London, where the average property costs almost twice as much as the UK average, this loss of buying power has a bigger effect. Buyers in the capital would need to add \u00a335,500 to their deposit to buy the same home with the same monthly mortgage repayment.<\/p>\n This example assumes a 75 per cent LTV mortgage using a 27-year term for a five-year fixed-rate loan at 4.8 per cent now, versus 4 per cent in January.<\/p>\n The hit to buying power in the capital has a greater impact on first-time buyers, who often take out longer mortgages and larger loans compared to existing homeowners.<\/p>\n \u2018House price growth is slowing to zero\u2019<\/strong><\/p>\n With affordability stretched by higher mortgage rates, some buyers have chosen to delay their purchases, causing the market to slow down. According to Zoopla, sales across the UK are down by six per cent year-on-year.<\/p>\n \u201cHouse price growth is slowing to zero as borrowing costs remain high and uncertainty surrounds which taxes will be increased in the autumn budget,\u201d said Tom Bill, Knight Frank\u2019s head of UK residential research.<\/p>\n