Its Mortgage Intermediary Market Confidence Barometer dropped 4.3 points from 66.5 in December to 62.2 in July, although this is still 5.9 points higher than 12 months ago.
The survey of 503 intermediaries showed house price increases over the last six months have naturally dampened confidence for potential for house prices to rise which has dropped 7.1 points since December to 65.7.
But, it suggests that brokers are still optimistic that there is room for further house price inflation.
ONS figures out this morning confirmed first-time buyer affordability is under stress and the index showed the biggest drop in confidence since December, down 10.0 points to 52.1 from 62.1.
NatWest said the rise in house prices is likely to have contributed to this as will the perceived tightening of affordability assessments following the introduction of the new MMR requirements.
Brokers are also more confident that rising house prices have handed homeowners more equity putting more people in a position to move.
Mortgage advisers also expect more homeowners to remortgage, although the drop in inflation confirmed this morning suggests any rise in interest rates and spur to remortgagors could be pushed out to next year.
Advisers are also feeling relatively confident about mortgage funding across all LTVs but the results show concern on constrained housing supply remains.
Graham Felstead, head of NatWest Intermediary Solutions, (pictured) said: “The broker community started the year in a very confident mood and that confidence remains high. The rise in house prices and the introduction of the MMR requirements has dampened confidence in some areas but generally speaking, the optimism we are experiencing now is significantly higher than last July when we started this index.”