The Winter 2024 edition of Paragon’s Mortgage Intermediary Insight Report reveals some of the ways that both brokers and their borrower clients have adapted amidst a challenging, albeit improving, economic landscape.

The first of our twice-yearly reports highlights how the volatile fiscal environment of the past year is shaping the market, influencing intermediary business strategy and investment behaviour.

One of the most notable aspects of this latest report is a rise in limited company lending, an area in which Paragon specialises. In recent times we’ve seen an increasing number of landlords utilise limited company structures as this form of property ownership enables finance costs, such as mortgage interest, to be offset against rental income. This is one method used by landlords to mitigate the increased tax burden resulting from Government policy and our report shows that intermediaries expect the shift to continue.

Almost half (49%) of intermediaries expect to see an increase in buy-to-let mortgages written to portfolio landlords utilising limited company structures throughout the next year, with 45% also anticipating an uptick in non-portfolio limited company business.

The report also revealed the base from which the increases are expected, with almost three in 10 (29%) of current mortgage cases written to portfolio landlords operating through limited companies and 15% amongst non-portfolio landlords.

Alongside the anticipated growth in limited company lending, the research, undertaken by BVA BDRC on behalf of Paragon, also found that:

• Remortgaging will be a key source of residential and buy-to-let business over the next 6-12 months  
• A growing proportion of intermediaries expect 2-year fixes to be the most popular product over the next 6-12 months
• The greatest proportion of intermediaries viewed the amount that landlords can borrow, based on rental calculation, as the main priority for their buy-to-let clients

Download MIIR – Winter 2024

Louisa Sedgwick, Paragon Bank Commercial Director for Mortgages, said: “Our twice-yearly MIIR provides us with an extremely useful picture of the mortgage market, particularly because it uses insight from intermediaries, people who know the market inside out.

“The Winter edition shows how they are diversifying to mitigate the impact of unstable economic conditions on purchases while focusing on fundamental aspects of business, like customer service and relationship building. Brokers tell us that landlords are adapting too, with more taking advantage of the potential benefits offered by incorporation and opting for products that may be more suited to today’s market than those they may have chosen in the past.  

“Confidence amongst intermediaries has understandably been influenced by the recent economic instability but the outlook is largely more optimistic when compared to the MIIR from the same period a year ago. It is also important to note that the fieldwork for the report was carried out in November and, since then, we’ve seen some positive economic signs, such as a cooling of inflation and increased consumer confidence. This will bring down rates, helping to stimulate a broader mix of mortgage business activity, so I’m sure we’ll see a more positive picture come the next edition in the Summer.”