A report from the Intermediary Mortgage Lenders Association (IMLA) found that the application to completion conversion rate of first-time buyer deals had risen by 19 percentage points from 48% of first-time applicants seen in Q1 2016, to 67% during the first three months of this year.
The positive trend continued among specialist mortgage borrowers, which includes applicants with adverse credit, equity release deals, and self-build projects. Last year, 56% of applications received during Q1 resulted in completion. By Q1 this year, the conversion rate had reached 67%, a rise of 11%.
The rate of mortgage applications resulting in completions across the intermediary channel reached 69% in Q1 2017 which is the highest level since the tracker was launched in Q1 2016.
Peter Williams, executive director of IMLA, said: “Low mortgage rates have contributed to this improving outlook for first-time mortgage borrowers. However, with the Bank of England reporting that average rates are creeping up on the higher loan-to-value products that buyers with modest deposits rely on, policymakers must continue to do their utmost to support lending to this part of the market.”
The tracker reveals that, despite affordability pressures, prospective first-time buyers are making more enquiries and applications than they were a year ago. The average number of enquiries received by intermediaries serving this segment of the market rose from 55 in Q1 2016 to 60 in Q1 2017. The proportion of enquiries leading to applications in principle also increased from 51% to 57%.
In the specialist mortgage market, the average number of enquiries received by intermediaries increased by 9 from 48 in Q4 2016 to 57 in Q1 2017.
Remortgaging was the only other market segment which saw more consumer enquiries during the first quarter of 2017 than the final quarter of 2016.
The average number of buy-to-let enquiries received by intermediaries increased by 5 from 52 in Q1 2016 to 57 in Q1 2017, while the rate of applications resulting in completions rose by eight percentage points from 60% to 68%.
Regulatory changes which have increased the complexity of the buy-to-let mortgage market, are driving growing numbers of borrowers towards the intermediary channel as they seek to reassess their portfolios and investment strategies.
Williams added: “The improving ratio of enquiries and applications to mortgage completions over the last year is a testament to the success of the intermediary channel in matching consumers with suitable products in a complicated and competitive marketplace.
In Q1 2017, 99% of intermediaries reported they were confident in the outlook for their business, with a further 64% reporting they were very confident.”
“The intermediary channel is well placed to deal with the needs of the growing number of borrowers with non-standard circumstances, which is reflected in intermediaries’ high levels of confidence.