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1 Oct 07 - Landlords 'Protecting Portfolios'
A new study shows residential landlords have protected
themselves from rising interest rates by reducing the proportion
of borrowing to equity on their portfolios - known as "gearing".
Research by buy-to-let lender Paragon has found the average
level of landlords' portfolio gearing has fallen from 48%
in 2002, to 38% in 2007. The level for landlords with three
or fewer properties is lower at 25%, quashing suggestions
that small-scale investors will bail out of the buy-to-let
market if rental yields contract.
Paragon chief executive Nigel Terrington said: "Doom-mongers
simply look at a 6% yield and a typical mortgage repayment
rate of just over 6%, then assume that landlords are making
a loss after financing. "Even for those with a higher portfolio
gearing this is not the case. Landlords do not have 100%
debt. In fact, the average debt is 38% of their portfolio
value and their effective yield, even after financing, remains
very attractive."
Source: Paragon
Mortgages
News items supplied by SelectNews, produced by PA Business,
part of the group that owns The Press Association, the UK's
national news agency. Copyright (c) PA Business 2007.
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