Buy-to-let mortgages are 'more profitable'

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Buy-to-let mortgages are 'more profitable'

Buy-to-let mortgages are more attractive to lenders as they are seen to be more profitable in the present financial climate, it has been revealed.

Lee Grandin, director at Landlord Mortgages, said many lenders prefer to lend to landlords with a higher rate on their mortgages than the less profitable first-time buyer sector, as significant competition over recent years has forced many to cut their rates for this group.

He commented: "With an attractive type of mortgage, inevitably that leads to more lenders wanting part of that profitable mortgage [market].

"What happens then is that the competition allows rates to go and become more competitive."

According to data compiled by Paragon Mortgages, more than a third of mortgage intermediaries saw an influx of buy-to-let business in the final quarter of 2011.

On average, 23.3 per cent of an intermediary's business was buy-to-let - compared to 19.3 per cent during the same period in the previous year.

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