Brokers remain pivotal in buy-to-let provider selectionBy Mark Long
First published in Mortgage Solutions, 28 Apr 2015.
Landlords have an ever-growing range of buy-to-let (BTL) providers and products available to choose from, so how do they arrive at the most appropriate combination?
BDRC Continental's quarterly monitor of landlord sentiment, the Landlords Panel, indicates that landlords continue to place a great deal of weight on the guidance they receive from mortgage intermediaries, and that the broker channel continues to dominate over direct arrangement channels.
Some 69% of mortgagees reported that they arranged their most recent buy-to-let loan via a broker; 13% applied directly in a branch, 12% directly over the telephone and 5% online.
So why is it that brokers remain the first port of call for so many potential buy-to-let borrowers? Evidently, whole of market knowledge and habit are the dominant factors.
Half (51%) of intermediary users welcomed the fact that a broker can source the most appropriate product from across the market. But it's not just about the functional benefits of product sourcing. Four in 10 (42%) reported that they have a longstanding relationship with their intermediary and a further one in five stated that they have "always arranged their buy-to-let loans this way". Other, less frequently mentioned reasons included an inability to arrange directly, specific lending criteria requirements and overall cost effectiveness.
As always though, we see some interesting variation within the findings.
Different portfolio sizes placed varying levels of importance for using a broker. Longevity of the broker relationship assumes even greater importance for landlords with more than five properties in their portfolios (+16% on average more likely than those with fewer properties). Single property landlords found the reassurance of whole of market coverage 10% more important than other groups. Larger landlords, with 20 or more properties, placed more onus on specific lending criteria - on average 15% more than other groups.
So, brokers can be reassured that we aren't yet seeing a flight to direct channels in the buy-to-let market, though there is latent interest in that as an option at least in some landlord segments. BDRC's advice to brokers would be to keep building those relationships and keep securing the business.