Mortgage rates rise, impacting US housing and UK rental markets

Global housing markets are facing significant pressure as mortgage rates rise and rental supplies tighten. In the United States, 30-year fixed-rate mortgages have recently crossed the 7 percent threshold, driven by surging bond rates and geopolitical tensions, including conflict in Iran. This increase has impacted mortgage applications and led more borrowers to seek adjustable-rate mortgages.

In the United Kingdom, elevated borrowing costs are exacerbating a rental crisis. Data from Zoopla indicates that rental supply has dropped for the first time in three years, causing annual rent growth to accelerate. Higher mortgage rates are keeping prospective first-time buyers in the rental market for longer, reducing available supply and driving up costs. UK rents are projected to increase by 4% to 5% by the end of 2026, with significant pressure seen in London and more affordable regional markets.