However, data indicates growing caution about the outlook for the sector
Three quarters of intermediaries expressed confidence on the outlook for the mortgage industry in the second quarter of this year, according to the Intermediary Mortgage Lenders Association (IMLA).
Its latest Mortgage Market Tracker report revealed what the trade body called a “surprisingly upbeat market sentiment” among advisers from April to June, although the data indicates growing caution about the outlook for the sector.
While 75% of advisers described themselves as ‘confident’ about the mortgage market, the proportion of those who were ‘very confident’ fell from 26% in April to 20% in June, while those who were ‘fairly confident’ fell from 56% to 40% over the period.
The IMLA research, which used data provided by BVA BDRC, also showed that intermediaries have maintained healthy business volumes in Q2, with the average adviser placing 93 cases over the previous 12 months. While this is slightly lower than the second quarter figures of the previous two years, it was still significantly higher than any quarter in the four years preceding 2021.
The buy-to-let sector also remained buoyant, accounting for 25% of mortgage cases placed in Q2 2023, a fairly small reduction from the 28% recorded in the previous year.
The average number of decisions in principle (DIPs) that intermediaries processed stabilised in Q2, having fallen in the five preceding quarters. On average, intermediaries dealt with 25 DIPs in Q2, up two on Q1 2023 – the first quarterly increase since Q1 2022.
In Q2 2023, conversions from DIP to completion improved slightly at 36%, up from 34% in the previous quarter, but lower than Q2 2022, when the figure was 44%. IMLA said the overall conversion rate was broadly similar across all market segments.
The conversion rate from full application to completion also increased slightly to 59%, up from 57% in the preceding quarter. Conversion rates for home movers were up significantly at 59%, a 7% increase on the previous quarter, while the figure for first-time buyers remained consistent at 61%.
“The latest findings demonstrate the remarkable resilience of the UK mortgage market and intermediaries themselves in the face of continued market volatility,” commented Kate Davies (pictured), executive director the Intermediary Mortgage Lenders Association.
“Confidence levels, while remaining generally robust, inevitably dipped in June as the expectation of interest rates remaining higher for longer became apparent. But with business levels maintaining healthy levels and conversion rates increasing, the outlook for the intermediary market appears positive.”
Davies added that the second quarter results were particularly encouraging in that they showed positive activity across all market segments, including sustained levels of first-time buyer cases and growth in the home moving sector, rather than a reliance on remortgaging.
“As the economic environment looks set to remain challenging, the demand for professional mortgage advice will continue to grow,” she said. “IMLA’s prediction that intermediaries could account for 90% of mortgage distribution by 2024, as reported in our ‘New Normal’ report earlier this year, continues to stand.”
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