Mortgage market confidence recovers in Q1, says IMLA

There’s a growing optimism about the outlook for the mortgage market, according to the latest Mortgage Market Tracker report from the Independent Mortgage Lenders Association (IMLA).

The findings show that intermediaries are keeping busy, with the average adviser placing 99 cases over the previous 12 months. The figure is a small rise on Q1 2022 (an average of 97 cases) and only four cases off the peak of 103 in Q4 2021.

Despite recent suggestions that the buy-to-let sector is struggling, the data also shows that this market held steady, with 28% of all cases handled in the buy-to-let space, up from 26% in the previous quarter.

And in the face of ongoing concern about the impact of rising interest rates, the report shows that confidence is returning to the mortgage market. Almost four out of five intermediaries (79%) said they are ‘confident’ about the outlook for the mortgage industry, up from just 65% in Q4. Confidence in the intermediary sector is even more marked, with 87% saying they are ‘confident about the sector’s outlook’, a number almost on par with the level before last year’s mini-Budget.

Conversion rates

The average number of Decisions in Principle (DIPs) that intermediaries processed continued to fall in Q1, following a similar trend to the previous four quarters. On average, intermediaries dealt with 23 DIPs, which is 9 less than the same quarter last year. That being said, despite a drop in January to 18 DIPs per intermediary, March saw the number rise back up to 27.

In Q1 2023, conversions from DIP to completion also fell to 34%, a 10% decline year-on-year. The fall in conversion rate was driven in the North (-3% compared to Q4 2022) and the Midlands (-4% compared to Q4), while conversions from DIP to completion in the South were the same as the previous quarter.

Meanwhile, 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.

Growing share

Kate Davies, Executive Director of IMLA, said: “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. The growing confidence expressed by intermediaries is a strong signal that our sector is weathering current volatility.

“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. 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.”

IMLA’s Mortgage Market Tracker is powered by the BVA BDRC, a leading research agency. For more information and previous reports, visit: http://www.imla.org.uk/