At last! Mortgages market confidence finally recover from Liz Truss disaster

The latest report from the Intermediary Mortgage Lenders Association (IMLA) reveals that intermediary confidence in the industry increased in Q1 2024.

Some 24% of advisers describe themselves as ‘very confident’ and 62 % ‘fairly confident’ about the future, compared with 14% and 60% in the previous quarter.

The proportion of advisers describing themselves as ‘very confident’ or ‘fairly confident’ in the intermediary sector itself rose to 88%, up from 84% in the previous quarter.

Such levels of intermediary confidence have not been recorded since Q2 2022, preceding the disastrous Liz Truss/Kwasi Kwarteng Autumn fiscal event.

Intermediary confidence in the outlook for their own businesses remained bullish, with 42% saying they were ‘very confident’ and 53% ‘fairly confident. The share of advisers who said they were ‘not very’ or ‘not at all’ confident fell away to almost nothing, a result not recorded since Q2 2021.

The average number of mortgage cases placed by intermediaries on an annual basis was slightly down at 92 per year, compared to 95 in Q4 2023, mainly due to a subdued January. Mortgage brokers placed an average of 96 cases, while IFAs reported an average of 69.

Residential lending continued to account for around two-thirds of intermediaries’ business, buy to let around a quarter, with a slight increase in specialist to roughly one in 11 cases.

Within residential there was a slight decrease in the proportion of product transfers and a small rise in movers, with  first-time buyer and remortgage activity remaining stable. 

The buy-to-let sector saw a marginal increase in limited company activity.

The average number of Decisions in Principle (DIPs) that intermediaries processed remained stable at 23, the same as the previous quarter and Q1 2023, but down from the August 2023 peak of 30.

Conversions from DIP to completion increased to 42%, up from 38% in Q4 2023 and an 8% increase year-on-year. The overall conversion rate was broadly similar across all market segments, with a slight rise in specialist (+9%).

The conversion rate from full application to completion also increased to 63%, up from 61% in the preceding quarter. Conversion rates for specialist-focused brokers were up significantly at 67%, a 7% increase on the previous quarter, while the figure for first-time buyer-focused brokers fell to 52%, down 7% on the previous quarter.

Kate Davies, Executive Director of IMLA, comments: “The mortgage market has proved to be remarkably resilient through a very tough economic period, and these results suggest growing optimism.

“Intermediaries have remained upbeat about the outlook for their own businesses for some time, but their confidence in the outlook for the wider mortgage market has improved sharply this year. This is probably a reflection of more positive sentiment resulting from rapidly falling inflation and the prospect of lower interest rates at some point in 2024.

“There has been an uptick in activity in the specialist sector, and it will be interesting to see whether this continues, as borrowers’ financial circumstances become increasingly complex.

“The market remains competitive, but identifying the best mortgage for their needs from the many options available is a significant challenge for borrowers, and they will continue to rely on quality mortgage advice to find the best solutions.”