Rising mortgage costs are hitting the rental market, it’s being claimed.

According to the Moneyfacts website, the Middle East conflict has led to 1,300 buy-to-let mortgage details being pulled from the market since the end of March. 

It also reports that the average rate charged on a two-year fixed buy-to-let mortgage increased from 4.66% at the start of March, to 5.40% today. 

The average five-year fixed buy-to-let mortgage rate went from 5.05% to 5.72% over the same timeframe.

Now the TDS Charitable Foundation has entered the debate, with a survey of over 2,000 private landlords in England.

It shows that 49% of landlords last year said they funded their rental property without any borrowing at all, up from 31% in 2024. This suggests higher mortgage rates do not affect around half of all landlords.

That said, 28% of landlords said they funded their rental property with interest only buy-to-let mortgages. 

This group is particularly susceptible to increased interest rates on mortgages, given they do not pay down the overall balance of their mortgage in their monthly payment. 

As such, any rise in interest rates directly increases the cost of the entire loan amount, thereby denting landlord cash flow and profitability.

Last year, mortgage costs were not cited as the primary in determining rent increases. 

Among the 56% of landlords who said they have increased rents over the previous 12 months, just a quarter (26%) cited growing mortgage costs. 

More frequently cited reasons for increasing rents included increased property maintenance and running costs (49%), wanting to align rents with the local market (44%), and increases in the cost of living more generally (41%).