The Bank of England’s successive hikes in interest rates are expected to discourage many aspiring first time buyers from getting onto the housing ladder, but this will have a much more positive impact on hundreds of thousands of buy-to-let landlords, says Paragon Mortgages.

Latest research from Paragon’s Buy-to-Let Index, January 2007 reveals that rental yields achieved by residential investor landlords have remained steady at 6% for the past eight months. It seems 2007 has started on a positive trend for landlords, and the buy-to-let market is set to remain strong as rising interest rates put increasing pressure on first time buyers.

John Heron of Paragon Mortgages says: “The private rented sector fills a key role in the housing market by providing decent, affordable accommodation for a growing number of households. In particular, people who need flexibility before they settle down or who are unable to afford to purchase their own home do tend to turn to privately rented accommodation. With high property prices and rising borrowing costs, more and more would-be home owners will choose to live in rented homes for longer, while they save a large enough deposit.