Mortgage brokers report higher numbers of loan applications converting to offers

Brexit uncertainties continue to have a negative influence on mortgage broker confidence but they saw more loan applications convert into offers in the first three months of 2019 than at any time during the last three years.

The latest analysis from the Intermediary Mortgage Lenders Association (IMLA) also shows that specialist loan offers and completions figures are also at record highs.

Brokers were able to convert more than 89% of applications into offers, the highest percentage recorded since the IMLA index began in the first quarter of 2016. This was an increase of almost 1% on the fourth quarter of 2018 and up 2% year on year. It is also up from 76% in the first quarter of 2016, before the European Union referendum took place.

The share of buy to let and specialist loan applications that led to offers both showed a marked improvement. The tracker found that 89% of buy to let applications resulted in an offer, while 91% of specialist applications did the same to reach a three year high for that part of the market.

Mortgage brokers reported a healthy flow of specialist mortgages in the first three months of 2019, that is loans outside of mover, remortgage, first time buyer and buy to let products. When asked, brokers revealed that the amount of specialist mortgage applications leading to an offer and also those offers that led to a completion were all at three year highs.

The IMLA Mortgage Market Tracker also found that the amount of accepted DIPs that go on to full mortgage application have increased significantly on last year. Overall, accepted DIPs to full applications rose by 8% quarter on quarter, with this measure rising by almost 13% for first time buyer loans and almost 11for specialist loans.

Despite brokers’ continued ability to successfully place mortgage business for borrowers, the Mortgage Market Tracker found that intermediary confidence continues to dip as brokers wait on Westminster to deliver an update on the UK’s Brexit plans.

The percentage of brokers who professed to be ‘very confident’ about their own business prospects continued to drop slightly to 53% from a high of 69% in the fourth quarter of 2016, while those who only feel ‘fairly confident’ rose to 45% from 30% over the same period.

‘In its recent Mortgages Market Study, the Financial Conduct Authority noted that the mortgage market is working well for a large majority of people in the UK and these tracker results underline that,’ said Kate Davies, executive director of the IMLA.

‘The share of loan applications that brokers are able to turn into offers for customers is at a three year high, supporting the view that intermediaries are doing an effective job for significant numbers of home buyers and other mortgage customers,’ she explained.

‘It’s also encouraging to see the growth of successful specialist mortgage applications. Borrowers who were once perhaps labelled as non-prime have struggled to secure funding since the financial crisis. But the need for quality specialist products has not abated in the last decade, so it’s good to see that brokers and lenders are finding ways to secure more loans for these niche borrowers,’ she pointed out.

‘The mortgage market is not immune from the current Brexit chaos but it’s keeping calm and getting on with the business of helping people finance their home purchases. High quality advice will always be important, whatever the state of the economy and the political climate,’ she added.