Rise in interest rates pushing up the cost of mortgages. | Josep Bagur Gomila

Natalia Bueno, president of the API association of real estate agents in the Balearics, is predicting that rents will rise because of the increasing cost of mortgages brought about by an upward movement in interest rates. "The cost of mortgages and the tightening of the requirements will reduce the number of people able to get obtain mortgages. Therefore, the demand for renting will rise."

She adds that a percentage rise cannot be predicted exactly because it is related to job creation and population growth as well as to uncertainties caused by the war in Ukraine. "You can't make calculations because everything is changing quickly." However, she singles out Palma for rent increases because of the level of demand.

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Depending on the size of the mortgage, she sees little difference in mortgage repayments and the cost to rent. But ultimately it comes down to whether people have the means to buy a property.

In this regard, the Balearic government will guarantee mortgages for residents of the Balearics who are first-time buyers but only for properties to a value of 270,000 euros. It has been calculated that just under 20% of homes in Mallorca are available for 270,000 or less.