The latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association shows surprisingly upbeat market sentiment among advisers during the second quarter of the year – but with a twist. 

Overall, 75 per cent of advisers described themselves as ‘confident’ about the mortgage market for the quarter – but the proportion of those who were ‘very confident’ fell from 26 per cent in April to 20 in June, while the ‘fairly confidents’ fell from 56 to 40 per cent over the period.

IMLA’s research shows that intermediaries are maintaining healthy business volumes, with the average adviser placing 93 cases over the previous 12 months – slightly lower than Q2 2022 (97) and Q2 2021 (95), but significantly higher than any quarter in the four years preceding 2021, three of which pre-dated the pandemic.

Despite negative headlines about the buy to let sector, the data suggest this sector remains buoyant, accounting for 25 per cent of mortgage cases placed in Q2 2023 – that’s only a small three per cent reduction from the figure recorded in Q2 2022.

The average number of Decisions in Principle that intermediaries processed stabilised in Q2, having fallen for the five preceding quarters. On average, intermediaries dealt with 25 DIPs in Q2, up 2 on Q1 2023 and the first quarterly increase since Q1 2022.

In Q2 2023, conversions from DIP to completion improved slightly at 36 per cent, up from 34% in the previous quarter, albeit significantly lower than Q2 2022, when the figure was 44 per cent. The overall conversion rate was broadly similar across all market segments.

The conversion rate from full application to completion also increased slightly to 59 per cent, up from 57 in the preceding quarter.  June was the best month on this score, with the conversion rate reaching 63%, the highest percentage since July 2022. 

Conversion rates for home movers – as measured from brokers where at least four out of 10 residential mortgages placed are for home movers – were up significantly at 59 per cent, a seven per cent increase on the previous quarter, while the figure for first-time buyers remained consistent at 61 per cent.

“The latest findings demonstrate the remarkable resilience of the UK mortgage market and intermediaries themselves in the face of continued market volatility” explains Kate Davies, executive director of IMLA.

“Confidence levels, while remaining generally robust, inevitably dipped in June as the expectation of interest rates remaining higher for longer became apparent. But with business levels maintaining healthy levels and conversion rates increasing, the outlook for the intermediary market appears positive.

“The results for this quarter are particularly encouraging in that they show positive activity across all market segments, including sustained levels of first-time buyer cases and growth in the home-moving sector, rather than a reliance on remortgaging.

“As the economic environment looks set to remain challenging, the demand for professional mortgage advice will continue to grow, and IMLA’s prediction that intermediaries could account for 90 per cent of mortgage distribution by 2024 … continues to stand.”