The survey showed that 54% of brokers expect sales to be flat in Q3, while 12% believe business will get worse in the coming three months.
Just 34% of brokers predicted business levels will increase in the coming quarter compared to well over 50% in Q1.
Nevertheless, the 122 brokers polled expect house purchase mortgages to make up 51% of sales in the next quarter, the highest level seen since the index began in 2008. By comparison, remortgage business is expected to be 31%, the lowest level recorded since the start of 2008.
In addition, 14% of advisers forecast that interest rates will rise in the next quarter.
Stephen Smith, director of housing for L&G, said: “The Bank of England believes that the recent rise in inflation is a temporary spike, but there is now more lingering doubt about how quickly it will drop.
“Some commentators have been flagging the inevitability of increases in the base rate for some time and the recently published inflation figures bring this sharply into focus.”
Andy Pratt, chief operating officer at Alexander Hall, said: “The feedback from brokers is a reflection of what customers are thinking. So many people are sitting on SVR, and the worry is that more and more will decide not to move, making them unlikely to remortgage. With transactions going down, brokers will have to make up their income from other areas. Businesses that adapt will be in a reasonable position.”
Indeed, L&G figures showed that 42% of brokers expect protection sales to improve in the coming quarter.
