Brokers grow in confidence as mortgage availability improves

07 February 2013

Intermediaries are more confident about mortgage market conditions than at any point in the last twelve months – but they are not quite as optimistic as lenders, according to the latest intermediary survey from the Intermediary Mortgage Lenders Association (IMLA)

Over a third of broker firms (37%) believe market conditions are currently improving, compared to 28% in July 2012 and 14% in January 2012.

Mortgage availability is also much improved from the early part of last year. While 80% of firms were unable to secure a mortgage for one or more standard borrowers in the three months leading up to January 2012, and 79% in July, only 63% reported the same issue in January 2013.

However, brokers’ expectations for gross lending in 2013 remain more conservative than the wider industry. IMLA members – representing over 80% of lending to the intermediary market – anticipate a total of £150bn (CML – £156bn), while intermediaries made a more cautious estimate of £139bn.

First-time buyers earmarked for growth

Mortgage advisers are most confident about remortgages being a source of new business, with over half (51%) predicting volumes will grow compared with over a third (35%) in January 2012. While expectations of more buy-to-let business have fallen back from 56% in July, almost half of advisers (48%) still see potential for growth in this area.

The biggest change of emphasis over the last year is in relation to first-time buyers. Almost twice as many brokers (40%) expect to see business volumes increase in this area, compared
with January 2012 (21%). First-time buyers will be helped by the anticipated stability of UK
house prices, which intermediaries expect to be approximately £162,500 in June 2013: little
more than £1,000 higher than the Land Registry figure for October 2012 (£161,605).

Percentage of intermediaries expecting to see business volumes increase
Percentage of intermediaries expecting to see business volumes increase

Peter Williams, Executive Director of IMLA, comments

“The economic outlook remains challenging but the future is looking up for the mortgage
market. The survey results show growing optimism, especially regarding opportunities for
first-time buyers, and intermediaries are going to play an essential role in achieving this. The
likelihood of new products appearing and strong competition between lenders means high
quality, professional advice will be invaluable for the many people looking to buy a property
or remortgage an existing home in 2013.

“It is extremely encouraging that brokers are experiencing fewer barriers to finding a
suitable product for standard consumers. Perhaps the strongest sign of renewed confidence
is the fact that more than half of brokers (53.7%) expect the intermediary market to account
for 60% or more of all mortgages sold this year.

“Although the Financial Services Authority (FSA) has toned down the Mortgage Market
Review’s (MMR) proposed ban on execution-only sales, some have already moved to end
non-advised mortgage transactions and more may follow. It is clear we will see the
relationship between intermediaries and lenders evolving further as the market adjusts to a
new regulatory environment under the Financial Conduct Authority (FCA).

“IMLA members place great value on the strength of their relationships with broker firms. In
our work over the coming months on issues such as MMR implementation and individual
registration, we will be working hard to strengthen and develop the intermediary market.”

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