Homebuyers need an extra £18,200 deposit as mortgage rates climb to 4.8% after Iran war

Rising mortgage rates have eroded buyers' purchasing power by nine per cent since January, as the average five-year fixed rate climbed from below 4% to around 4.8% in the wake of Middle East conflict. Someone who qualified for a £200,000 mortgage at the beginning of the year is now limited to £182,000 for the same monthly outlay. The Bank of England has kept its base rate at 3.75% throughout the year, yet lenders have lifted fixed rates regardless, driven by traders pricing in a prolonged period of elevated borrowing costs.

Londoners are hardest hit, needing an extra £35,500 on their deposit — almost twice the national average — a consequence of the capital's significantly higher property prices.

Buyers in the North East face the smallest cash shortfall at £10,200, though the percentage reduction in purchasing power there is the steepest anywhere in the country.

Despite the squeeze, searches for homes rose 7% in the four weeks to August 16, with activity up across every UK region for the first time in a year.