Buy-to-let investors’ gearing declines

Buy-to-let investors’ gearing has declined to 36% – its lowest level since May, reveals Paragon Mortgages.

New research from the specialist lender out today reveals that the average gearing across 200 landlords’ portfolios is down from 38% in Q4 2007.

Paragon says this reflects investors’ cautious approach in an environment of volatile borrowing costs, as well as their strong credit quality.

The research follows the Council of Mortgage Lenders’ recent arrears data, which shows that arrears in the buy-to-let market were at 0.73% in 2007, significantly lower than the 1.1% arrears level recorded in the wider mortgage market.

John Heron, managing director of Paragon Mortgages, says: ‘Landlords are cautious investors who are conservative and risk-averse in the management of their portfolios.

“Although borrowing costs have risen since the beginning of last year, landlords have positioned themselves to cope with this.”

He adds: “With rising rents and higher yields on properties, we expect buy-to-let arrears and possessions to continue at a lower level than in the wider market.’