1.8 million fixed-rate deals are due for renewal this year
Falling house prices in London are starting to move some homeowners into higher loan-to-value brackets at the point of remortgage, brokers say, adding a further cost layer to an already slow capital market.
New forecasting from House Buyer Bureau projects London's average house price falling from £552,655 to £547,889 by December 2026, a decline of -0.9%, or £4,766. The capital's average price has already dropped by close to £21,000 since peaking at £568,801 in July 2025.
The scale of that shift matters because mortgage pricing steps up sharply between LTV tiers.
Recent lender repricing shows the gap in practice: Barclays' fee-free two-year fix at 90% LTV was recently cut to 4.79%, while NatWest's lowest standard purchase rate sits at 4.30% for a two-year fix at 60% LTV, rising to between 5.16% and 5.30% at 95% LTV.
A borrower whose falling property value pushes them from, say, a 75% into an 80% or 85% band at renewal can face a noticeably different rate, on top of whatever the wider market is doing to pricing at the time.
Brokers report equity shortfalls
Katrina Horstead, a broker at Versed, told Mortgage Introducer the trend has become more visible in day-to-day broking activity, particularly in larger cities where flat prices have been slower to recover than houses.
She said some clients had expected to move into lower LTV brackets by the time they came to remortgage, but had built up far less equity than anticipated, which can affect both product availability and pricing.
That pattern is not evenly spread across London's market. Separate analysis of Land Registry data has found close to half of small London flats selling at a loss, with inner London flat prices down 6.2% over the past year, stripping around £35,000 off what sellers can expect to pocket, while semi-detached and terraced homes in the capital still rose 1.2% over the same period.
London remains the sole faller
House Buyer Bureau's assessment of the UK House Price Index found London the only British region with a negative average monthly rate of house price growth over the past 12 months, at -0.2%.
The North East recorded the strongest average monthly growth, at 0.8%, followed by Yorkshire and the Humber and the North West, both at 0.6%. The West Midlands and East Midlands each posted 0.5%, England as a whole averaged 0.3%, and the South East was flat at 0.0%.
1.8 million renewals due this year
Timing adds to the pressure. Roughly 1.8 million fixed-rate mortgage deals are due to expire this year, according to UK Finance's latest mortgage market forecast, meaning a large share of borrowers face a fresh valuation and rate assessment regardless of what happens to London prices between now and December.
For those already in negative equity or close to it, options narrow further. Most lenders will only accept new applications up to a set maximum LTV, which is why product transfers with an existing lender, rather than a move to a new lender, tend to be the fallback route when a valuation has fallen since purchase.
Chris Hodgkinson, Managing Director of House Buyer Bureau, whose data underpins the forecast, said the wider property market had seen minimal growth over the past 12 months, with London remaining the exception.
He said that "it seems as though the London market has run out of steam," unlike previous downturns that were followed by a quick return to growth.
None of this means every borrower with a maturing deal in London will fall into a higher LTV band; regular repayments and any deposit built up before the recent peak still count in a borrower's favour. But for clients who bought with a smaller deposit in 2024 or 2025, or who own flats in the categories most affected by weak price growth, the combination of a falling valuation and a looming renewal date is worth flagging early, before a lender's own valuation delivers the surprise instead.
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