It’s Back! Confidence returns to the mortgage market says IMLA

The latest Mortgage Market Tracker report from the Intermediary Mortgage Lenders Association reveals that confidence has returned to the mortgage market, with sentiment improving steadily month by month in the last quarter of 2023.

In total, 76 per cent of intermediaries said they were confident about the outlook for the market in September, falling to 69 per cent in October but then rising to 83 per cent by December. 

Of the 83 per cent, just over a fifth were ‘very confident’. The overall ‘confident’ figure for the quarter was 74 per cent. That is a marked improvement on Q4 2022, when 65 per cent said they were confident about the future for the mortgage industry.

Confidence levels in intermediaries’ own businesses were even higher, with 92 per cent of intermediaries describing themselves as confident in the outlook for their own firms in Q4 2023.

The average number of mortgage cases placed by intermediaries on an annual basis increased to 95 per year, compared to 92 in Q3. Mortgage brokers placed an average of 103 cases, while IFAs reported an average of 62.

Residential lending continued to accounted for roughly two-thirds of intermediaries’ business, buy to let around a quarter and specialist about one in 14 cases. The proportion of buy-to-let cases placed remained roughly the same as the previous three quarters of 2023.

Having increased to 25 in Q2, the average number of Decisions in Principle that intermediaries processed fell in Q4, with the lowest average of just 20 DIPs recorded in December and the Christmas period. The biggest falls were in DIPS for first-time buyer-focused brokers* and specialist-placing advisers.

In Q4 2023, conversions from DIP to completion remained stable at 38 per cent, close to mid-2022 levels. The overall conversion rate was broadly similar across all market segments except first-time buyer-focused brokers, who saw a six per cent fall. 

Brokers in the Midlands also saw a five per cent fall in DIP to completion conversions.

The conversion rate from full application to completion fell from 64 per cent in Q3 to 61 per cent in Q4, but was still up three per cent year-on-year.

Kate Davies, the executive director of the IMLA, comments: “It is interesting to note that the level of buy-to-let business remained broadly consistent throughout 2023, despite negative headlines. The slight drop in first-time buyer numbers was perhaps to be expected given the ongoing cost of living crisis and the increased challenge of saving for a deposit, on top of wider affordability constraints.

“These latest results are a testament to the resilience of intermediaries who have been operating in difficult conditions to secure the right solutions for their customers. Competition in the market is now lively, and lenders are confident that mortgage advisers will continue to work hard to find the most suitable mortgages for their clients from a vast array of products on offer. As a result, IMLA predicts that intermediaries will account for 89% of all mortgage business written this year.”