High-rise mortgage costs see surge in rents across the UK

It’s a tale of two markets: while private rents have soared to record highs in the UK, making life precarious for tenants, the for-sale sector has slowed sharply and property values have started to fall, with sharper declines predicted for next year. The latest house price index from Nationwide, Britain’s biggest building society, along with Bank of England mortgage lending data due this week, should shed further light on the severity of the UK’s housing slowdown. The market was cooling, and mortgage rates were creeping up, even before the Truss government’s disastrous mini-budget brought the pandemic-era housing boom to an abrupt halt. Mortgage rates jumped to well above 6%, a level last seen in 2008, adding hundreds of pounds to mortgage payments and triggering a collapse in demand. Unsurprisingly, Nationwide figures for October showed the first monthly drop in house prices in 15 months: at 0.9%, it’s the largest fall since June 2020. Expensive mortgages have deterred many first-time buyers, who are now renting instead in the hope that rates will fall in the new year – causing intensified competition in the rental market, according to property site Rightmove. But that’s not the only explanation for the surge in rental...

Read more