Property News > Higher number of loan applications turning into offers, report mortgage brokers

Higher number of loan applications turning into offers, report mortgage brokers

Mortgage broker confidence continues to feel the effects of Brexit uncertainty, but the first three months of 2019 saw the highest conversion rate of loan applications to offers in the last three years. 

Specialist loan offers and completion figures have also hit record highs, as shown by the latest Intermediary Mortgage Lenders Association (IMLA) analysis.

The analysis confirms that some 89% of applications were converted into offers by brokers, and these figures are the highest recorded since the first quarter of 2016 when the IMLA index began. This represents an increase of almost 1% compared with the previous quarter, and an increase of 2% year on year. It is also up 13% on the last full quarter before the EU referendum took place back in 2016.

Meanwhile, marked improvement was also evident in both the buy to let and specialist loan market, with the tracker showing that 89% of applications for buy to let were successful, while 91% of specialist applications were also approved. 

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. Brokers also revealed that they had seen three-year highs in both the number of specialist applications leading to an offer and those that resulted in a completion. 

Additionally, the amount of accepted DIPs that lead to full mortgage application has climbed significantly in the last year, the IMLA Mortgage Market Tracker shows. Overall, there has been an 8% rise quarter on quarter in the number of accepted DIPs leading to full applications, with this measure rising by almost 13% and 11% for first time buyer loans and specialist loans respectively.

The Mortgage Market Tracker also found that confidence continues levels continue to fluctuate while brokers wait to discover the UK’s Brexit strategy. Despite the lingering uncertainty, they continue to perform well when placing mortgage business for borrowers.

A further breakdown of the report shows that confidence levels are waning, with the percentage of brokers declaring themselves ‘very confident’ about their own prospects falling from a high of 69% in the fourth quarter of 2016 to their current level of 53%. Meanwhile, the percentage of those who 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.

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