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Mortgage broker business nudged downwards in Q2

  • 25/08/2016
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Mortgage broker business nudged downwards in Q2
Mortgage broker business levels dropped slightly from an average of 49 new enquiries to 44 in the second quarter as consumer confidence wavered ahead of the EU referendum, according to data.

This dip in borrower confidence meant mortgage lenders also appeared to have to work harder to attract business by offering a little more flexibility on criteria, according to a tracker index from the Intermediary Mortgage Lenders Association (IMLA).

In the second quarter, 57% of first-time buyer Applications in Principle converted to completions against 51% in Q1 as enquiries fell away ahead of the 23 June referendum. The number of lender declines also edged down to 23% from 28% in Q1.

The average number of enquiries received from first-time buyers and homemovers was 46, both down from 55 in Q1. Remortgagors showed slightly more caution, with average enquiry levels dropping to 38 per intermediary in Q2, compared to 48 in Q1.

Overall business confidence about the mortgage industry and the intermediary sector dipped from last year, but brokers remained upbeat.

Peter Williams, executive director of IMLA, said: “Next quarter we will have a clearer view of the consequences of the Brexit vote – though this is by no means the only element impacting upon supply and demand in the market. The increased tax burdens for landlords from stamp duty reforms, changes to the wear and tear allowance, and the upcoming reduction in interest relief, may see many remortgage to a lower rate as one way of clawing back some lost income.

“Borrowers must now find their way in the new ultra-low interest rate environment. Mortgage pricing is already very low and fixed-rate mortgages are unlikely to fall further due to being priced from the swap curve,” he added.

According to the latest CML figures, the amount of mortgage lending in July was just 1% down on last year at £21.4bn, although the trade body’s chief economist Bob Pannell cautioned on the distorting effects of the April Stamp Duty change.

“The Bank of England expects stronger economic headwinds to build as we move into 2017, and the Monetary Policy Committee’s (MPC) package of monetary policy measures represents a spirited effort to lean against these on a timely basis. The MPC has pencilled in a further cut in Bank Rate later this year, but aims to avoid negative interest rate territory,” he said.

The Term Funding Scheme should lift market sentiment but it is unclear how well the Bank’s actions will underpin borrower demand in a more adverse economic climate, he added.

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