14% of mortgages now buy-to-let

10 July 2006
The buy-to-let proportion of the mortgage sector has shown unprecedented growth in the last five years, according to new figures from Paragon Mortgages.

Buy-to-let investors now account for around 14 per cent of all mortgage applications that are handled by advisers, up from just six per cent in June 2001.

At the same time as investors are setting up properties for the lettings market, the proportion of first time buyers is falling, down two percentage points from 11 to nine per cent.

"Financial advisers have benefited from the buoyancy of buy-to-let, particularly over the past 12 months," said John Heron, managing director of Paragon Mortgages.

"The proportion of advisers' business represented by buy-to-let is higher than it has been for many years," he added, noting that consumer confidence in the property market had not been higher this century.

The figures have caused concern among some industry observers however, who see the growing proportion of buy-to-let mortgages as a sign that more people are struggling to afford to buy a house, which has lent weight to the lettings market.

The long-term implications of this are that property prices may have to fall somewhat in relation to wage and inflation levels to bring them more into line with what the average person can afford.

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