Despite the recent rises in interest rates, landlords will continue to be able to handle their mortgages, according to a recent survey of landlords by Paragon Mortgages.The research shows that on average landlords’ borrowings are equivalent to less than 40% of their total portfolio value, a ratio that allows sufficient room to cope with further rises in interest rates without undue pressure.
John Heron, Managing Director of Paragon Mortgages commented: “It is important for the stability of the buy-to-let industry that landlords take account of the possibility of rising interest rates when raising finance and it is reassuring to see that they are doing so. Despite some scaremongers predicting the decline of buy-to-let post rate rise, the vast majority of landlords have left themselves ample room to accommodate any expected rise in borrowing costs.
“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.
“With landlords evidently taking a responsible approach to the gearing of their investment portfolios, they remain well placed to add to their property portfolios in order to meet growing tenant demand. Our research suggests that landlords will be able to take the increased cost of borrowing in their stride.
