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Brexit concerns softens mortgage market

A Brexit ‘uncertainty effect’ is washing over UK mortgage brokers after the largest drop in business volumes in more than two years.

This is according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA).

The organisation found the average that the average number of cases brokers handle on an annual basis dropped by 10% in Q3 2018 from 90 to 81 cases. This is the largest quarterly drop since Q1 2016, when annual average cases fell 11% (82 to 72 cases) in Q1 2016.


This comes at a time when mortgage intermediaries anticipate Brexit adversely affecting their businesses. In fact, the percentage of brokers who considered themselves to be ‘very confident’ about their own business’ fell from 68% in 2016 to 60% this year.

The drop in mortgage broker activity underlines the fall in the number of mortgage purchase completions on a year-on-year basis. According to UK Finance statistics, the number of first-time buyer (FTB), homemovers, and buy-to-let (BTL) investors in Q3 2018 all fell compared to a year ago.

Remortgage activity, however, remains strong. Quarterly figures for residential remortgages were up more than 6%, while annual remortgage activity for both residential and BTL loans grew compared with Q3 2017.

Separate IMLA research also suggests that fewer brokers are feeling positive about the mortgage market in 2018. In the first half of 2018, 33% of brokers felt the current market would ‘improve a little’, but that figure fell to 20% by the second half of 2018.

Using data from BVA BDRC, the quarterly IMLA Mortgage Market Trackers examines consumers’ success rate in securing a mortgage via the intermediary channel by tracking their progress from initial expression of interest (seeking a ‘decision in principle’) through to completion.

In doing so, it compares the fortunes of first-time buyers, homemovers, remortgagors, BTL borrowers and applicants for specialist loans. For those who do move forward with a property transaction, however, the market continues to work well, with nearly 9 in 10 (88%) of all mortgage applications leading to offers.

Kate Davies, executive director of IMLA, said that while the Brexit negations remain so complex and uncertain, many people may be adopting a ‘wait and see’ approach before moving forward with a property purchase.

“While the national uncertainty doesn’t help the prospects of our mortgage brokers, it’s encouraging to see that when an intermediary does apply for a loan on their client’s behalf, they are being accepted,” she added.

“Mortgages going from application to offer remain at more than two-year highs as intermediary lenders continue to find solutions for clients.”

Davies continued: “It’s also good to see that while fewer people are seeking finance to buy a property, the remortgage market remains strong and ensure keen and competitive pricing for those property owners seeking a new deal.”

She concluded that, with signs that the Bank of England possibly adopting a ‘wait and see’ approach towards potential future rate rises, borrowers should continue to be able to lock into attractively-priced deals before the Bank reacts.


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