Insurance News Archive

Paragon: Landlords can handle rate rises

The third successive rise in interest rates will not adversely affect most of the UK's buy-to-let landlords despite the predictions of "scaremongers", a survey from Paragon Mortgages suggests.

The study finds that, on average, landlords' borrowing equates to less than 40 per cent of the total value of their property portfolio.

This leaves the "vast majority" with "ample room to accommodate any expected rise in borrowing costs", Paragon's managing director John Heron commented.

Moreover, the ratio of borrowing to portfolio value has declined since 2003, reducing the risks of buy-to-let for investors in the UK.

Meanwhile, Quentin Fitzsimmons, head of government bonds at Threadneedle Investments, has predicted that commercial property will withstand the rate rise more successfully than residential property.

"Unlike residential property which has a closer correlation to interest rates, commercial property returns are dependant on a much wider range of factors, so we are not anticipating any major impact there," he noted.

22 Jan 2007