Average five-year fixed mortgage rates have risen from below 4% in January to around 4.8% today, meaning homebuyers now need an extra £18,200 in deposit funds to counter higher borrowing costs, according to property website Zoopla.
For buyers in London, the additional cost would be much higher at £35,000, while lower house prices in the North East mean people buying in this region would need an extra £10,200.
Impact on borrowing power
Zoopla estimates that a buyer who could previously afford a £200,000 mortgage while keeping their monthly repayment unchanged could now only borrow around £182,000 for the same cost.
Richard Donnell, Executive Director at Zoopla, said: "Average mortgage rates have stabilised but remain closer to 5% than 4% meaning affordability remains an important factor for many home buyers choosing their next home.
"Buyers have plenty of choice this autumn and will be able to make competitive bids for homes. Motivated sellers need to price carefully to attract interest and bids and seek the advice of local agents for the likely levels of demand and interest in their home as market conditions vary widely across the country."
Rise in buyer activity
The number of people searching for homes to buy increased by 7% in the four weeks to August 16, compared with last year.
The number of house hunters is higher across every region in the UK for the first time in a year, with the strongest levels of activity coming from the east and southeast of England, and Wales.
Late August and early September tend to see an increase in asking price reductions as sellers adjust pricing to attract buyers over the autumn.
House price growth slows
House prices across the UK grew by 0.9% in July, compared with the same month last year, to an average of £272,800, according to Zoopla's house price index.
This is a slower rate than the 1.3% year-on-year increase recorded in June. Mr Donnell added: "Many buyers have taken a 'wait and see' approach over the summer months in response to higher borrowing costs and political uncertainty.
"The low point for activity was mid July around the time of the World Cup final. Since then we have seen a steady increase in the number of people searching for a home, assessing their options ahead of the post holiday rebound in sales market activity. This is a nationwide trend and the first time searches for homes are up across Britain this year."
