The Intermediary Mortgage Lender’s Association (IMLA) has reported that there was a significant rise in the average number of mortgage enquiries received by intermediaries in the final quarter of 2016.
IMLA’s Mortgage Market Tracker revealed that the average number of enquiries increased by 26% to 58 per intermediary in the final quarter of last year, up from 46 in the previous quarter.
The trade body said this suggests that borrowers’ appetite remains strong, as buyers continue to be attracted by the low rates available on the market. This is the largest average number of enquires recorded by the tracker, surpassing the previous high of 49 recorded in Q1 2016.
The quarterly report – which uses data from BDRC Continental to examine intermediary sector activity – follows mortgage applicants’ journey through the approval process from their initial enquiry to completion. The tracker divides the results by firms dealing with first-time buyers, homemovers, remortgagors, buy-to-let borrowers and applicants for specialist loans.
There was also a significant rise in the average number of buy-to-let enquiries. Between Q3 and Q4, this jumped from an average of 43 per intermediary to 63 – an increase of 47%. IMLA said that one of the obvious reasons for this increase is the greater complexity that landlords are now facing in the market place, providing investors with an incentive to pursue intermediated advice. In Q4 2016, landlords will have been acutely aware of the now-implemented PRA changes to buy-to-let underwriting standards, and the forthcoming changes to landlords’ mortgage tax relief, which are due in April.
Data from the CML shows that the combined volume of house purchase and remortgage buy-to-let transactions grew by only 1.4% from Q3 to Q4. While there is a lag between enquires, completions and lending, the data indicates that the sharp rise in the number of intermediary enquiries is largely the result of more landlords seeking advice.
Peter Williams, executive director of IMLA, said: “It is unsurprising that there was an increase in the numbers of borrowers seeking expert advice in the final quarter of 2016, given that the changes to buy-to-let underwriting standards and mortgage tax relief were looming large on the horizon. As the layers of regulation in the market become increasingly complicated, and the number of products increase, the intermediary market continues to play a very important role in the provision of mortgage finance to a variety of borrower types.
“It is very encouraging to see that the profile of the intermediary channel continues to grow among borrowers, and that many more are making it their first port of call. Different borrowers have different needs, and consulting an independent expert can help ensure the best possible outcomes for a wide variety of cases.”
The latest data from the tracker also shows that greater proportions of borrowers progressed through the mortgage approval process in Q4 than in Q3. In addition to an increase in the number of enquires, brokers also experienced a rise in the proportion of the number of applications in principle (AIPs) resulting in full applications, which went from 70% to 73%. Furthermore, the proportion of full applications resulting in offers jumped from 75% to 81%, and the subsequent rate of completions Increased from 74% to 80%. This shows that borrowers were more willing to commit to the market in the fourth quarter, and there was an appetite among lenders for business.
Table: customers’ progress through the mortgage market, Q4 2016
| Q3 2016 (all) | Q4 2016 (all) | Change | |
| Average number of enquiries | 46 | 58 | +12 |
| Initial enquiries to AIPs | 58% | 58% | +0% |
| AIPs to full applications | 70% | 73% | +3% |
| Applications to offers | 75% | 81% | +6% |
| Offers to completions | 74% | 80% | +6% |
| Completions per 100 enquiries | 23 | 28 | +5 |
| Completions per 100 AIPs | 39 | 47 | +8 |
The homemovers market recorded the highest rate of both applications resulting in offers (87%), and offers resulting in completions (also 87%). In the buy-to-let market, which experienced a significant increase in demand in Q4, 82% of applications resulted in an offer, and 81% of offers resulted in a completion.
Williams added: “It is encouraging to see that customer outcomes improved in the final quarter of 2016. There was an increase in both the proportion of applications that progressed to offers, and the proportion of offers that borrowers subsequently completed upon. There was a lot of uncertainty following the referendum result in the third quarter, it is clear that both lenders and borrowers had faith in the market in the final quarter, and were willing to capitalise on the low mortgage rates available.”