Homebuyers are facing a potential £244-a-month extra charge as the housing market shows signs of a significant slowdown. Sales agreed over the past month have dropped 7% compared to the same period last year, while the number of new buyers entering the market has slumped by 15% relative to last summer, according to Zoopla's latest House Price Index.
Mortgage Rate Spike Bites Despite Recent Cuts
The figures highlight the lingering impact of the spike in mortgage rates earlier this spring, even as lenders begin to trim the cost of fixed-rate deals. Mortgage rates climbed to around 5% in April, adding an average of £125 a month to repayments on a typical mortgage.
However, the burden is far heavier in expensive parts of the country. A typical London buyer is now paying approximately £244 more every month—almost £2,900 a year—than before rates rose. Even first-time buyers are being squeezed, with those purchasing in London facing repayments around £232 a month higher, compared to an increase of just £66 in the North East.
Regional Divide Widens as Southern England Cools Faster
These regional differences help explain why southern England has cooled much faster than many northern markets. Zoopla notes that many prospective purchasers are delaying moving plans due to affordability pressures and uncertainty over the economic outlook ahead of the Autumn Budget.
Although activity has slowed sharply, the downturn is not as severe as the market freeze that followed the 2022 mini-Budget, when sales briefly collapsed by more than 20%. Instead, buyers are becoming increasingly selective, forcing sellers to work much harder to secure offers.
Industry Experts Weigh In on Market Dynamics
Richard Donnell, executive director at Zoopla, said: "Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty. The impact is less severe than what the market faced after the 2022 mini-budget, and mortgage rates have started to fall."
He added that conditions now vary sharply across the country. "It's a buyer's market across much of the South right now, but motivated sellers in northern England and Scotland are still finding buyers at broadly last year's pace," he said.
Marc von Grundherr, director at Benham and Reeves, said affordability had become "the defining force" in today's market. He warned that sellers "can no longer rely on yesterday's pricing" and that those chasing last year's values risk seeing their homes sit unsold for months.
Verona Frankish, chief executive of Yopa, said buyers had become "far more selective" as mortgage costs continue to stretch household budgets. She emphasized that getting the asking price right from the outset is now "more important than ever."
