Demand for homes to rent has jumped as some aspiring buyers put their plans on hold in the hope that mortgage rates will drop in the new year.

The number of people enquiring about homes to rent is up 23% on this time last year, and the total number of home movers in the market looking to rent or buy is just 1% lower than last year. 

First-time buyers have been hardest hit by mortgage rate rises, with some now looking at the rental market as a short-term alternative. However, the number of smaller rental homes on the market is 4% lower than last year so choice is more limited.

Four in ten (42%) first-time buyers with plans to buy in the next few years have already got their total deposit saved, indicating there is a group ready and waiting to see if mortgage rates will drop.

However, the current shift in demand is putting further pressure on an already undersupplied rental market, with agents saying they are managing 36 enquiries per property on average, as competition between tenants hit record levels this year.