Broker confidence remains high

Measuring confidence across six market components, the index score dropped 4.3 points from 66.5 in December to 62.2 in July. But the latest index score is still 5.9 points higher than 12 months ago.

Graham Felstead, head of NatWest Intermediary Solutions, said: “The broker community started the year in a very confident mood and that confidence remains high. The rise in house prices and the introduction of the MMR requirements has dampened confidence in some areas but generally speaking the optimism we are experiencing now is significantly higher than last July when we started this Index.

“This Index gives us a good snapshot of the mood of the market and, as we continue it in the future, we will be able to build up a picture of trends that will help us to anticipate issues that will be concerning brokers. Confidence about first time buyer affordability continues to be fragile which is why we remain committed to helping intermediaries in this sector by supporting the Government schemes, lending at high LTVs and having an affordability calculator that’s easy-to-use. It’s the same one used by our underwriters, so intermediaries can rely on the results.”

The survey, conducted in July 2014 amongst 503 intermediaries, measured the degree of confidence they had for six key market components. Brokers were asked to rate each component out of 100, with a score of over 50 indicating a positive view whereas a score of under 50 indicates a negative outlook.

House price increases seen in the last six months have naturally dampened confidence for potential for house prices to rise which has dropped 7.1 points since December to 65.7.

But, it suggests that brokers are still optimistic that there is room for further house price inflation. First-time buyer affordability has seen the biggest drop in confidence since December, down 10.0 points to 52.1 from 62.1, although it’s still marginally higher than a year ago.

Again the rise in house prices is likely to have contributed to this as will the perceived tightening of affordability assessments following the introduction of the new MMR requirements.

The one market component that has seen an increase in its confidence score is homeowners having sufficient equity in their existing properties to move which has increased by 1.2 points from 64.5 in December to 65.7. And it’s a massive 13.8 points better than 12 months ago. Again, this can be related to the accelerated rise in house prices this year.

And brokers are still confident about the demand for remortgaging which scored 68.6 – a small decrease of 3.5 on December’s score of 72.1, but still 3.8 points higher than last July. The speculation about a future base rate rise appears to have positively influenced brokers’ views.

The last two index scores (December 13 & July 14) have shown that broker concerns about there being sufficient funding from lenders across all LTVs have dissipated with the latest of score of 65.5 being slightly down on December’s score (3.2 points) but still 9.0 points better than this time last year.

Finally, confidence about there being an adequate supply of properties in local areas has seen a drop of 3.3 points taking it back to a level just above last July’s score of 54.8, which is probably a good reflection of the general consensus that a programme of new build activity is needed to cater for the demand for housing in this country.