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Many landlords likely to be loyal to their mortgage broker

Over half, some 57% of all landlords are most likely to source their next mortgage using the same broker, new research has found.

Some 59% of portfolio landlords and 50% of non-portfolio landlords said that they are likely to stick with their current broker while 41% will go straight to a lender for their next mortgage.

The latest trends report from Paragon also found that only 16% said that they’re likely to consider an online mortgage broker service and just 10% are likely to switch brokers.

But 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 the fourth quarter of 2018. But this remains some way off highs of 15% to 20% in 2010 to 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 the third quarter of 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).

‘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,’ said John Heron, director of mortgages at Paragon.

‘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 10 landlords use an intermediary,’ he added.