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Loyal landlords most likely to reuse the same broker for new mortgages

Loyal landlords most likely to reuse the same broker for new mortgages

  • 57% of all landlords most likely to source their next mortgage using the same broker
  • Portfolio (59%) and non-portfolio (50%) landlords both likely to stick with their current broker
  • 41% of all landlords say they will go straight to a lender for their next mortgage

More than half of all landlords surveyed in Paragon’s latest PRS Trends Report for Q3 2019 say they are most likely to source their next mortgage from their existing mortgage broker.

Asked the question for the first time in Q3 2019 as part of Paragon’s long-standing PRS Trends survey, completed by a panel of 201 experienced landlords, 57% said they are most likely to return to the same broker for their next mortgage, whilst 41% expect to go straight to a lender despite the market being so heavily intermediated. Interestingly, only 16% say they’re likely to consider an online mortgage broker service and just 10% are likely to switch brokers.

The report reveals little disparity between portfolio (59%) and non-portfolio landlords (50%), with both groups most likely to stick with their existing broker when choosing a new mortgage. Portfolio landlords have larger-scale property interests than non-portfolio landlords, with four or more mortgaged properties.

Despite this, fewer landlords overall are expecting to add to their portfolio, with just 8% expecting to purchase property in the next quarter, almost reaching the historic low of 6% recorded in Q4 2018. This remains some way off highs of 15-20%, maintained between 2010-2015.

The proportion of landlords expecting to sell property in the next quarter also decreased slightly, from 23% to 22%, representing the first time that both measures have simultaneously slowed since the same time last year. The disparity between landlords expecting to buy compared with those looking to sell now sits at 15%, as the gap continues to widen since the two were exactly even in Q3 2014.

Looking in more detail, the proportion of non-portfolio landlords looking to purchase property in the next quarter fell from 4% to 1%, whilst portfolio landlords continue to be more active, with 10% expecting to buy, in an attempt to make strategic investments to strengthen their financial position amid on-going turbulence in the Private Rented Sector (PRS).

John Heron, Director of Mortgages at Paragon, said:

With so much change in the PRS in recent years, landlords have had to adapt quickly to higher taxation which has impacted returns on their portfolios. Throughout that time, landlords will have relied more heavily than ever on intermediaries to help them get the very best deals available. Therefore, it is no surprise that, whilst the future remains unpredictable, landlords are maintaining some stability by reusing the same brokers for their next mortgage.

It’s surprising, however, to hear that some landlords are considering approaching a lender directly for their next mortgage. This does not match well with the actual behaviour of landlords particularly in the portfolio segment where 9 out of 10 landlords use an intermediary.

See the latest PRS Trends report for Q3 2019 in full.

30 September 2019

Paragon Banking Group PLC.  Registered in England number 2336032.  Registered office 51 Homer Road, Solihull, West Midlands  B91 3QJ.