The Intermediary Mortgage Lenders Association (IMLA) Mortgage Market Tracker for Q2 showed the average number of cases handled by intermediaries was slightly down from an average of 99 in Q1 and 97 during the same period last year.
However, business levels were still higher than any quarter in the four years before 2021.
The average number of decisions in principle (DIP) completed by intermediaries recovered during the period following declines over the last five quarterly periods. Intermediaries processed 25 DIPs on average in Q2, up from 23 in Q1. This marked the first quarterly rise since Q1 last year.
The DIP to completion conversion rate rose from 34 per cent in Q1 to 36 per cent in Q2, although IMLA noted this was lower than the 44 per cent conversion rate in Q2 last year.
The DIP to completion rate was broadly similar across all segments of the market.
The conversion rate from full application to completion also improved from 57 per cent to 59 per cent quarter-on-quarter. Conversions in June were the strongest at 63 per cent, which was the highest percentage since July last year.
The data showed that conversion rates for homemovers saw a seven per cent rise to 59 per cent, while for first-time buyers this was stable at 61 per cent.
Buoyant BTL activity
Buy-to-let mortgages accounted for a quarter of cases placed in Q2, which was only slightly lower than the 28 per cent share last year. IMLA said despite the negative headlines about the sector, this suggested that activity was still “buoyant”.
Residential cases made up two thirds of activity, with first-time buyers and homemovers taking a 19 per cent share of business apiece. This was fairly similar to the previous quarter.
Intermediaries still confident
In Q2, 75 per cent of intermediaries expressed confidence about the outlook for the mortgage sector, although the proportion of brokers who felt ‘very confident’ dropped from 26 per cent in April to 20 per cent in June.
Over the same period, those who were ‘fairly confident’ in the outlook of the market fell from 56 per cent to 40 per cent.
As for their feelings towards their own firm, intermediaries were most confident in June with 96 per cent of respondents saying so. This was stronger than the 93 per cent confidence levels in May and 94 per cent in April.
Kate Davies, executive director of IMLA, said: “The latest findings demonstrate the remarkable resilience of the UK mortgage market and intermediaries themselves in the face of continued market volatility. 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.
“The results for this quarter are particularly encouraging in that they show positive activity across all market segments, including sustained levels of first-time buyer cases and growth in the homemoving 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, and IMLA’s prediction that intermediaries could account for 90 per cent of mortgage distribution by 2024, as reported in our ‘New Normal’ report earlier this year, continues to stand.”
