Intermediary caseloads are also rising
Around four in five, or 79%, of intermediaries have expressed confidence about the outlook for the mortgage industry, according to the Intermediary Mortgage Lenders Association (IMLA).
The latest findings from IMLA’s Mortgage Market Tracker showed that despite ongoing concern about the impact of rising interest rates, confidence is returning to the mortgage market.
There was a notable increase in the proportion of brokers who said they are ‘confident’ about the outlook for the mortgage industry in the Q1 2023 survey, as the figure was just 65% in Q4 2022.
IMLA’s research also revealed a more evident confidence in the intermediary sector, with 87% saying they are ‘confident about the sector’s outlook’, a number that dropped due to last year’s mini budget.
“Given the recent uncertainty that we saw in the mortgage market in the final quarter of last year and at the start of 2023, these figures represent a positive shift,” Kate Davies (pictured), executive director of the Intermediary Mortgage Lenders Association, commented. “The growing confidence expressed by intermediaries is a strong signal that our sector is weathering current volatility.”
Case volumes grow year-on-year
The trade association also reported that intermediaries placed an average of 99 cases over the last 12 months, recording a small rise on Q1 2022, which had an average of 97 cases. The latest figure is also just four cases off the peak of 103 in Q4 2021.
Despite recent suggestions that the buy-to-let sector is struggling, the data showed that the market held steady, with 28% of all cases handled in the buy-to-let space, up from 26% in the previous quarter.
“Intermediary caseloads are continuing to rise, reflecting both brokers’ growing share of the mortgage market – something that was highlighted in IMLA’s ‘New Normal’ report this year – and the importance of advice,” Davies commented.
“As borrowers face the challenges of the rising cost-of-living, many are clearly turning to intermediaries as a source of guidance and support. But there is also further good news for the market in that advisers are not just helping borrowers to remortgage, but also continuing to see demand from those looking to buy too.”
Conversion rates drop again
Meanwhile, the average number of decisions in principle (DIPs) that brokers processed continued to fall in Q1, following a similar trend in the previous four quarters. IMLA reported that, on average, intermediaries dealt with 23 DIPs, which is nine less than the same quarter last year.
But while a drop to 18 DIPs per intermediary was recorded in January, March saw the number rise back up to 27, IMLA noted.
In Q1 2023, conversions from DIP to completion also fell to 34%, a 10% decline year-on-year, while the conversion rate from full application to completion remained relatively unchanged at 57%.
February was the most positive month, with the conversion rate reaching 60%, the highest percentage since July 2022. In addition, conversion rates for first-time buyer focused brokers increased by 3% from Q4 to Q1, despite the affordability challenges faced by this particular subset of borrowers.