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Average LTV of investment property portfolios drops to 35%

Jordan Williams | 1:15 Friday 9th February 2018

The average loan-to-value (LTV) of investment property portfolios has fallen to its joint-lowest level in over 15 years.

The latest PRS Trends report by Paragon has found that the average LTV of investment property portfolios was 35% in Q4 2017.

The report also found that more than half (51%) of landlords said any decision to sell properties was not dependent on rising mortgage interest rates.

Of the remaining 49%, the average mortgage interest rate at which landlords said they would consider selling properties was 5%.

More than four out of ten landlords (43%) said that rent increases were not dependent on mortgage interest rates, while just over half (51%) said that any decision to refinance properties was not based on interest rates.

John Heron, managing director of mortgages at Paragon (pictured above) said: “Since that peak in 2012, gearing has been on a downward trend and currently sits at an all-time low of 35%.

“In response to fiscal changes over the last two years, landlords are clearly less willing to take higher loan-to-value mortgages and borrow more, whilst regulatory changes – though welcomed by lenders – have constrained the market in its ability to offer higher LTV mortgages.

“There is no evidence to suggest lending to landlords has been anything other than sustainable.

“With low levels of gearing landlords appear well positioned to withstand the higher interest rates that the markets are anticipating, which is good news for buy-to-let and the wider private rented sector.”

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