More UK mortgage applications through intermediaries successful than a year ago

The overall rate of mortgage applications in the UK resulting in completions reached 69% in the first quarter of 2017, up 19% from 48% in the previous quarter, the latest figures show.

The figures from the Intermediary Mortgage Lenders Association (IMLA) tracker report also show that 67% of first time mortgage applications were completed, up substantially from 48% in the same period of 2016.

The quarterly report, which uses data from BDRC Continental, follows mortgage applicants’ journey through the intermediary channel from initial enquiry through to completion for first time buyers, home movers, remortgagors, buy to let borrowers and applicants for specialist loans.

The tracker reveals that, despite affordability pressures, prospective first time buyers are making more enquiries and applications than they were a year ago. The average number of enquiries received by intermediaries serving this segment of the market rose from 55 to 60 year on year and the proportion of enquiries leading to applications in principle (AIPs) also increased from 51% to 57%

The rate of first time buyer applications resulting in completions has been steadily improving over the past year. In the second and third quarters of 2016 some 49% of first time buyer applications to intermediaries resulted in completions, which increased to 53% in the fourth quarter. Year on year it means the ratio of first time buyer completions has improved more than any other market segment.

Separate lending figures also suggest the first time buyer market is in improving health, with the Council of Mortgage Lenders (CML) latest figures showing that first time buyers borrowed £12.3 billion in the first quarter of 2017, up 10% from the first quarter of 2016.

‘First time buyers’ struggles have been highly publicised, with affordability stretched by rising house prices and modest income growth. However, rising levels of mortgage enquiries, applications and completions shows that a significant number of first time buyers are still both willing and able to get a foot on the property ladder,’ said Peter Williams, IMLA executive director.

‘Low mortgage rates have contributed to this improving outlook for first time mortgage borrowers. However, with the Bank of England reporting that average rates are creeping up on the higher loan to value (LTV) products that buyers with modest deposits rely on, policymakers must continue to do their upmost to support lending to this part of the market,’ he added.

Overall there is an improving picture for the wider intermediary market. The rate of mortgage applications resulting in completions across the intermediary channel reached 69% in the first quarter of 2017, the highest level since the tracker was launched at the beginning of 2016 and 11% higher year on year and up 4% quarter on quarter.

The tracker also shows that the specialist segment of the mortgage market, which includes adverse credit mortgages, equity release mortgages and self-build mortgages, performed particularly with 67% of specialist applications via intermediaries resulting in completions, up 11% year on year and 6% quarter on quarter.

It points out that regulatory changes have increased the complexity of the buy to let mortgage market, and there is evidence growing numbers of borrowers are turning to the intermediary channel as they seek to reassess their portfolios and investment strategies. This has resulted in more enquiries from buy to let buyers.

‘The improving ratio of enquiries and applications to mortgage completions over the last year is a testament to the success of the intermediary channel in matching consumers with suitable products in a complicated and competitive marketplace,’ Williams explained.

‘The intermediary channel is well placed to deal with the needs of the growing number of borrowers with non-standard circumstances, which is reflected in intermediaries’ high levels of confidence,’ he said, adding that in the first quarter of 2017 some 99% of intermediaries reported they were confident in the outlook for their business, with a further 64% reporting they were very confident.

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