Mortgage rates have risen. This means the cost of borrowing money for property has gone up. As a result, landlords have made about £4,000 less in profit from each property they rent out over the last year.

2. Numbers to Understand:

• If a landlord took a specific mortgage in June 2022, after paying the loan interest, they’d make about £609 each month from rent, which is £7,312 for the year.
• But, if the same loan was taken in June 2023, they’d make only £250 a month, which totals £2,995 for the year. That’s a drop of £4,317!

3. What Did the Study Find? A platform called finder.com checked various data, like mortgage rates, house prices, and rental prices. They found:

• More expensive costs for owning rental property are making landlords less interested in new deals.
• In July, the average interest rate for these types of loans reached 6.18%, while in June, it was 5.45%.
• The average price of a house in the UK in June was £287,546.

4. What’s the Bigger Picture?

• Fewer people are taking out these types of loans. In fact, the money lent for these mortgages dropped 40% to £5.8 billion at the start of this year.
• Only 9.8% of all home loans were for these types of mortgages in early 2023. That’s the lowest since 2011!

5. Expert Opinion: Kate Steere from finder.com mentioned that fewer people seem interested in investing in these types of properties. The main reason? Higher interest rates are making it less profitable for landlords. She warns that this could make things tough for renters – “This will have a worrying impact on an already competitive rental market, leaving renters with fewer options and rising costs as they attempt to navigate the cost-of-living crisis.”

Summary

Due to increased costs from higher mortgage rates, landlords are making less money. This could lead to fewer rental homes and higher prices for renters in the future.