UK landlords are responding to higher levels of mortgage interest rates by cutting down on their borrowing.

This is according to research from specialist lender, Octane Capital, which compared the total amount of borrowing amongst buy-to-let landlords between Q3 2022 and Q2 2023 and the corresponding period the year before.

It found that buy-to-let landlords reduced their borrowing by around £7bn over that time period, from £37.9bn in 2021-2022 to £30.4bn in 2022-2023.

In terms of a percentage change, this means that buy-to-let landlords collectively reduced their borrowing by 19.8% in just a single year.

Landlords have looked to reduce their exposure to the mortgage market, given how the Bank of England base rate has shifted over that period.

At the start of December 2021 the base rate stood at 0.1%, while by June 2023 it reached 5.0%.

Other events also rocked the markets including Russia’s invasion into Ukraine and in  September 2022 ex-Prime Minister Liz Truss’s ill fated mini-budget.

The rest of the market followed a similar trend to buy-to-let, as lending to first-time buyers dropped from £68.1bn in 2021-2022 to £65.9bn in 2022-23, a reduction of 3.2%.

Meanwhile all other forms of lending fell by 7.6%, from £92.2bn to £85.2 bn.

Commenting on the research  Octane Capital chief executive Jonathan Samuels says: “Landlords are taking fewer risks with their borrowing, which makes sense given how the market has become objectively less attractive in the past couple of years.

“No longer are buy-to-let mortgages available for 2-3%, so it’s less economically viable to invest in property on a highly leveraged basis.

He concludes: “Now landlords are in a period where they’re adjusting to a new normal, where they need to be strategic and consider using a larger deposit if they want to continue growing their portfolios.”