The latest - September 2023 - Hamptons Monthly Lettings Index has revealed that a rising number of landlords face higher rates when their mortgage deals expire, with investors across the UK now collectively paying £15bn in mortgage interest annually. This figure has increased 40% (or £4.3bn) over the last 12 months and 58% (£5.5bn) since it bottomed out in November 2021.

This rise reflects a combination of new investor purchases at higher interest rates, existing tracker rates increasing, and fixed-term mortgage deals expiring. This comes even though the number of outstanding buy-to-let mortgages has been falling since November 2022 as investors have either paid down debt or sold up. Despite this, the total value of all mortgages has remained broadly flat over the same period.

This relatively recent surge in rates follows a long-term fall in borrowing costs that began in 2015 and concluded in 2021, according to the report, which adds that between March 2015 and November 2021, the total amount of mortgage debt held by landlords rose by 43%. However, the total amount of mortgage interest paid fell by 3% over the same period, driven down by falling interest rates.

Hamptons stated: ‘The increase in borrowing by landlords predominantly wasn’t spent on property, with the number of rented homes rising by just 4% over the same period. As landlord’s fixed mortgage terms expire, the number of cheap mortgage rates will continue to dwindle unless rates fall substantially. Consequently, this £15.0bn figure is likely to continue rising over the coming months and years, even if mortgage rates remain close to where they are today.’