Buy-to-let landlords can handle the pressure says Paragon Mortgages

23 January 2007
Amid concerns about rising mortgage rates after the third interest rate rise in a row, Paragon Mortgages has claimed buy-to-let mortgage holders are poised to cope with the increased cost of borrowing.

Landlords on average borrow under 40 per cent of the total value of their portfolio, leaving them "ample room to accommodate any expected rise in borrowing costs", said managing director John Heron.

"Over the last four years landlords' loan to portfolio value ratios have been generally declining, showing that on the whole, buy-to-let now has a lower risk profile than it did in 2003," he commented.

Last week, Paragon released the results of a study showing that eight per cent more landlords believed that demand for rental properties was growing than during the previous quarter.

But buy-to-let insider analyst Ajay Ahuja this week advised buy-to-let homeowners to ensure that they had thoroughly researched their investment and mortgage type before making any commitment.

The buy-to-let mortgage was first introduced in 1996 and over one million UK households now occupy buy-to-let properties.

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