It returns to levels prior to Truss' and Kwarteng's mini budget
Intermediary confidence in the mortgage industry outlook increased in the first quarter of the year, the latest Mortgage Market Tracker report from the Intermediary Mortgage Lenders Association (IMLA) has indicated.
The report reveals that 24% of advisers are ‘very confident’ and 62% are ‘fairly confident’ about the future, up from 14% and 60%, respectively, in the previous quarter.
Confidence in the intermediary sector itself rose to 88%, up from 84% in Q4 2023 – confidence levels that have not been seen since the second quarter of 2022, prior to the Liz Truss and Kwasi Kwarteng Autumn fiscal event.
Intermediary confidence in their own businesses also remained high, with 42% ‘very confident’ and 53% ‘fairly confident’. The percentage of advisers who were ‘not very’ or ‘not at all’ confident fell to almost zero, a result last seen in the second quarter of 2021.
Meanwhile, the average number of mortgage cases placed by intermediaries annually decreased slightly to 92, from 95 in the last quarter of 2023, largely due to a slow January. Mortgage brokers placed an average of 96 cases, while independent financial advisers reported an average of 69.
Residential lending accounted for about two-thirds of intermediaries’ business, buy-to-let around a quarter, and specialist lending roughly one in 11 cases. Within residential lending, there was a slight decrease in product transfers and a small rise in movers, with first-time buyer and remortgage activity remaining stable. The buy-to-let sector saw a marginal increase in limited company activity.
The average number of decisions in principle (DIPs) processed by intermediaries remained stable at 23, the same as the previous quarter and the first quarter of 2023, but down from the August 2023 peak of 30.
Conversions from DIP to completion increased to 42%, up from 38% in the fourth quarter of 2023, an 8% year-on-year increase. The overall conversion rate was similar across all market segments, with a 9% rise in specialist cases.
The conversion rate from full application to completion also rose to 63%, up from 61% in the previous quarter. Conversion rates for specialist-focused brokers were significantly higher at 67%, a 7% increase from the previous quarter, while rates for first-time buyer-focused brokers fell to 52%, down 7%.
“The mortgage market has proved to be remarkably resilient through a very tough economic period, and these results suggest growing optimism,” said Kate Davies (pictured), IMLA’s executive director. “Intermediaries have remained upbeat about the outlook for their own businesses for some time, but their confidence in the outlook for the wider mortgage market has improved sharply this year. This is probably a reflection of more positive sentiment resulting from rapidly falling inflation and the prospect of lower interest rates at some point in 2024.
“There has been an uptick in activity in the specialist sector, and it will be interesting to see whether this continues, as borrowers’ financial circumstances become increasingly complex.
“The market remains competitive, but identifying the best mortgage for their needs from the many options available is a significant challenge for borrowers, and they will continue to rely on quality mortgage advice to find the best solutions.”
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