Mortgage Payments Set to Rise for 5.2 Million Borrowers: What London Landlords Need to Know

Understanding the Forecast: Why Mortgage Payments Will Rise

The Financial Policy Committee (FPC) of the Bank of England has indicated that by late 2028, approximately 5.2 million borrowers—about 58% of those with mortgages—are expected to see an increase in their monthly mortgage payments. This follows a period of historically low interest rates and a recent rise in borrowing costs. Although the committee expects these increases to be moderate compared to the sharp hikes seen in recent years, they represent a significant shift for many mortgage holders.

For private landlords, especially in London where borrowing costs and property prices are elevated, this development has several critical implications.

What This Means for Landlords

Impact on Landlord Finances

Rising mortgage payments will directly affect landlords with variable-rate or tracker mortgages and those coming to the end of fixed-rate deals. Portfolio landlords with multiple properties may experience compounded financial pressure.

Single-unit and accidental landlords should also review their mortgage terms to understand how increased repayments will impact cash flow.

Tenant Affordability and Rent Payments

Higher mortgage costs can lead landlords to reconsider rental pricing strategies. However, tenants may also face financial pressures, especially if their own mortgage or living costs rise. This calls for a balanced approach to rent increases to avoid higher vacancy rates or arrears.

Lending Environment and Regulatory Changes

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are consulting on permanently removing the loan-to-income (LTI) cap, although aggregate limits on high LTI lending remain. This could influence future borrowing conditions and mortgage product availability.

Practical Steps for Landlords

1. Review and Prepare Your Mortgage Arrangements

   • Check whether you have a fixed, variable, or tracker rate and note any upcoming expirations.
   • Engage with your lender about potential repayment changes and explore options like remortgaging or extending terms.
   • Build or maintain contingency funds to manage possible payment increases.

2. Assess Tenant Affordability and Rental Pricing

   • Update affordability assessments when vetting new tenants or reviewing leases.
   • Aim for sustainable rent levels that reflect market conditions and tenant capacity.

3. Monitor Regulatory Developments

   • Stay informed on FCA and PRA consultations affecting lending rules.
   • Work closely with mortgage brokers or advisors to understand implications.

4. Maintain Open Communication Channels

   • Encourage early conversations with tenants about payment difficulties to find workable solutions.
   • Regularly review your financial position with advisors.

Tailoring Actions by Landlord Profile

• Single-Unit Landlords: Secure stable mortgage terms and nurture tenant relationships.
• HMO Landlords: Monitor collective tenant affordability and diversify income streams.
• Portfolio Landlords: Review your entire portfolio to identify properties with high mortgage cost exposure and consider strategic refinancing.
• Accidental Landlords: Seek professional advice to understand financial risks and compliance requirements.

Next Steps for London Landlords

Schedule a mortgage review meeting with your lender or broker, update tenant affordability assessments, and plan rent reviews that reflect the broader economic context.

How Rentals & Sales Can Support You

Our landlord intelligence hub offers tailored portfolio reviews, compliance audits, and pricing strategy consultations designed for London's dynamic market. We help landlords navigate financial pressures and regulatory changes with confidence and pragmatism.

Contact us to arrange a review and ensure your property investments remain resilient amid rising mortgage costs.

Compliance Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Landlords should consult qualified professionals for advice tailored to their specific circumstances.