Thirty-eight per cent of mortgage intermediary companies are expanding their operations amid a backdrop of labour market challenges, new research by Paragon Bank has suggested.

Increasing headcounts is the most common way that firms are looking to bolster resources, with a survey of 337 mortgage intermediaries revealing that 48% are looking to take on experienced advisers.

As part of the research, undertaken for Paragon’s Mortgage Intermediary Insight Report, brokers highlighted that their recruitment was motivated by a desire for knowledgeable staff who can hit the ground running, as well as diversification into more complex markets.

Three in 10 of the firms adding extra resources said they are recruiting trainee advisers to support their long-term growth aspirations and a quarter are hiring paraplanners to assist advisers with administrative tasks.

A considerably smaller proportion of mortgage broker businesses, just 7%, reported that they are scaling back.

“It’s really encouraging to see intermediary firms expanding,” said managing director for mortgages at Paragon, Richard Rowntree. “It gives a good indication of the strength of the market and could be viewed as a reflection of the more positive outlook for this year.”

Brokers did also highlight recruitment challenges, however, with a third reporting that it is “fairly difficult” to attract new staff, and a further 31% deeming it to be “very difficult”. The study found that just 5% said it is “very easy”, which rose to 19% among those who consider increasing headcount to be “fairly easy”.

Paragon found that to overcome this hurdle, some firms are focusing on upskilling initiatives for their existing workforce.

This shift towards internal talent development was also supported by investment in non-personnel resource, the most popular being additional technology and enhanced marketing, selected by 31% and 30% of companies currently growing.

Rowntree added: “While I’m aware of the difficulty for those looking to take on experienced advisers, in line with data pointing to a tightening of the broader labour market in the UK, it’s reassuring to see that firms are mitigating any resource shortfalls by developing existing employees or investing in marketing and technology.

“Doing so will help to ensure that there is a wealth of talent available, both now and in future, to support borrowers with sound financial advice to guide their investment strategies.”

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