Ana Lai, Real Estate Senior Director at S&P Global Ratings, comments on the impact of 12 months of mortgage rate increases on rental housing affordability following a low interest ‘home-buying boom’ in the residential REIT and social housing markets.

Mortgage costs have nearly doubled, forcing more consumers to rent or to continue renting for longer. S&P Global Ratings expects this trend to continue until homes become more affordable, which will support rental housing demand, even in a recession.

We believe fundamentals for both rated rental housing REITs and social housing providers remain resilient as demand continues to outstrip supply in many markets.

As the housing market adjusts to much higher mortgage rates, many consumers will likely rent for longer. The worsening affordability of housing will remain a tailwind for rental housing issuers until overvaluation of home prices eases more meaningfully. This should support the credit quality of rental housing landlords over the next two years.