Intermediaries feel positive about the outlook of their own businesses too
Confidence has returned to the mortgage market as sentiment improved steadily in the last quarter of 2023, according to the Intermediary Mortgage Lenders Association (IMLA).
The trade body’s latest Mortgage Market Tracker report revealed that 76% of intermediaries expressed confidence regarding the market’s outlook in September. This figure slightly declined to 69% in October but rebounded to 83% by December, with 21% of respondents indicating they were ‘very confident.’
For the entire quarter, 74% of intermediaries reported feeling confident about the mortgage market’s outlook – a notable increase from the 65% recorded in the same period last year.
Confidence levels were even higher regarding intermediaries’ own businesses, with 92% expressing confidence in their firms’ outlook for Q4 2023.
IMLA also found that, on average, intermediaries placed 95 mortgage cases annually, up from 92 in Q3. Mortgage brokers handled an average of 103 cases, while independent financial advisers (IFAs) reported an average of 62 cases.
Residential lending continued to dominate intermediaries’ business, accounting for approximately two thirds of cases, while buy-to-let constituted around a quarter and specialist cases comprised about one in 14. The proportion of buy-to-let cases placed remained roughly the same as the previous three quarters of 2023, IMLA noted.
Meanwhile, the average number of decisions in principle (DIPs) processed by intermediaries declined in Q4, with December and the Christmas period recording the lowest average of just 20 DIPs. Significant decreases were also observed in DIPs for first-time buyer-focused brokers and specialist-placing advisers.
In Q4 2023, conversion rates from DIP to completion remained stable at 38%, similar to mid-2022 levels. However, first-time buyer-focused brokers experienced a 6% decrease in conversion rates, and brokers in the Midlands saw a 5% decline in DIP to completion conversions.
The conversion rate from full application to completion decreased from 64% in Q3 to 61% in Q4, but demonstrated a 3% increase year-on-year.
“It is great news that confidence is returning to the mortgage industry after a challenging year, and that intermediaries are feeling positive not just about the future of their own businesses, but the wider market in which they operate,” commented Kate Davies (pictured), executive director at the Intermediary Mortgage Lenders Association. “We will watch closely to see whether sentiment continues to improve if inflation carries on its downward trend.
“It is interesting to note that the level of buy-to-let business remained broadly consistent throughout 2023, despite negative headlines. The slight drop in first-time buyer numbers was perhaps to be expected given the ongoing cost-of-living crisis and the increased challenge of saving for a deposit, on top of wider affordability constraints.”
Davies added that the latest results were also a testament to the resilience of intermediaries who have been operating in difficult conditions to secure the right solutions for their customers.
“Competition in the market is now lively, and lenders are confident that mortgage advisers will continue to work hard to find the most suitable mortgages for their clients from a vast array of products on offer, she said. “As a result, IMLA predicts that intermediaries will account for 89% of all mortgage business written this year.”
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