67% of first-time buyers’ mortgage applications made via intermediaries resulted in completions during the first quarter of 2017, according to the Intermediary Mortgage Lenders Association’s (IMLA) latest Mortgage Market Tracker.
This is 19 percentage points higher than Q1 2016, when 48% of applications were completed.
The quarterly report – which uses data from BDRC Continental – follows mortgage applicants’ journey through the intermediary channel from initial enquiry through to completion. IMLA says that, in doing so, it contrasts the fortunes of broker firms with a particular focus on first-time buyers, homemovers, 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 in Q1 2016 to 60 in Q1 2017. 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 Q2 and Q3 2016, 49% of first-time buyer applications to intermediaries resulted in completions, which increased to 53% in Q4. Comparing year-on-year, it means the ratio of first-time buyer completions has improved more than any other market segment.
Table: First-time buyers’ journeys through the intermediary channel, Q1 2016 & Q1 2017
| Q1 2016 | Q1 2017 | Change(percentage points) | |
| Average number of enquires per intermediary | 55 | 60 | 5 |
| Rate of enquiries resulting in application in principles (AIPs) | 51% | 57% | 6 |
| Rate of AIPs resulting in applications | 64% | 69% | 5 |
| Rate of applications resulting in offers | 70% | 84% | 14 |
| Enquiry – completion rate | 16% | 26% | 10 |
| AIP – completion rate | 31% | 46% | 15 |
| Application – completion rate | 48% | 67% | 19 |
Source: IMLA/BDRC Continental
IMLA said lending figures also suggest the first-time buyer market is in improving health, with the Council of Mortgage Lenders (CML) reporting that first-time buyers borrowed £12.3bn in Q1 2017 – 10% more than in Q1 2016.
Peter Williams, executive director of IMLA, said: “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.
“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.”
The rate of mortgage applications resulting in completions across the intermediary channel reached 69% in Q1 2017 – the highest level since the Tracker was launched in Q1 2016. This is 11 percentage points higher than the 58% recorded a year ago, and 4 percentage points higher than the 65% seen in Q4 2016.
The Tracker shows that the specialist segment of the mortgage market – which includes adverse credit mortgages, equity release mortgages and self-build mortgages – performed particularly well in Q1 2017. 67% of specialist applications via intermediaries resulted in completions, up 11 percentage points from Q1 2016 (56%) and six percentage points from Q4 2016 (61%).
Furthermore, the average number of enquiries received by intermediaries in this area of the market increased by 9 from 48 in Q4 2016 to 57 in Q1 2017. Remortgaging was the only other market segment which saw more consumer enquiries during the first quarter of 2017 than the final quarter of 2016.
Regulatory changes have also 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. The average number of buy-to-let enquires received by intermediaries increased by 5 from 52 in Q1 2016 to 57 in Q1 2017, while the rate of applications resulting in completions rose by 8 percentage points from 60% to 68%.
Williams added: “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.
“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. In Q1 2017, 99% of intermediaries reported they were confident in the outlook for their business, with a further 64% reporting they were very confident.”
