<p><span>Higher mortgage rates are set to reduce people’s home buying power by up to 28%, according to Zoopla’s latest UK house price index.</span></p> <p><span>The property portal’s data shows that the housing market is transitioning to a buyers’ market, with the macro environment having “evolved rapidly” over the summer, including interest rates rising to combat inflation and escalating energy prices. </span></p> <p><span>Mortgage rates, Zoopla said, were set to reach 5% by Q4 of this year, which is double the rates seen at the start of 2022.</span></p> <p><span>Zoopla explained that if a buyer were to purchase an average priced UK home with a 75% loan- to-value mortgage, this would cost them £825 per month in repayments at a 2% rate. But if they switched to a 5% rate while retaining the same repayments, they would only be able to afford a mortgage 28% smaller in value.</span></p> <p><span>This difference would affect housing demand into next year for the seven in ten buyers using a mortgage, Zoopla said. Their courses of action would be either to put down larger deposits, allocate more income for mortgage costs or “adjust their budgets” by buying smaller properties or seeking homes in cheaper areas. “A fourth option is …