More than half of landlords likely to reuse same broker for their next mortgage

The majority of landlords are most likely to source their next buy-to-let mortgage from their existing broker, new research shows. 

According to Paragon’s latest PRS trends report for the third quarter of 2019, 57% of all landlords are most likely to use the same mortgage broker when taking out their next mortgage, while 41% state they would be most likely to go direct to a lender for a buy-to-let mortgage. 

Just 16% of respondents to the survey stated that they are 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 that non-portfolio landlords, with four or more mortgaged properties.

The study found that 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 dropped marginally, 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 PRS.

John Heron, director of mortgages at Paragon, commented: “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 nine out of ten landlords use an intermediary.”

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