IMLA: Intermediaries confident in own businesses and long term market future

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row of houses

Intermediaries remained confident in their own businesses’ outlook throughout the first quarter of 2020, according to new data from the Intermediary Mortgage Lenders Association (IMLA). The findings come despite a fall in intermediary confidence about the wider mortgage market in March due to the COVID-19 outbreak.

According to the latest Mortgage Market Tracker from IMLA, the long-term outlook for the mortgage market looks more stable, with pent-up demand for housing set to return post-crisis.

Kate Davies, Executive Director of IMLA said:

“It’s no real surprise that the coronavirus lockdown and effective closure of the purchase market led to a decline in intermediary confidence in March. And the market’s future remains highly uncertain in the short-term.

“However, 2020 started on an optimistic note and there is every reason to believe the mortgage market will return to strength in the long-term. There are homeowners still looking to move and first-timers hoping to buy. The pent-up demand we saw earlier this year could return and lead to a surge in business when life begins to settle post-lockdown.

“In the meantime, mortgage intermediaries have adapted well in response to the crisis. We have seen a rise in the adoption of digital tools such as video calls to deliver advice and platforms to enable remote working, for example, while brokers also shifted their focus under lockdown to remortgage and product transfer activity.”

There were signs of an emerging ‘Boris boom’ in January, with intermediary businesses reporting higher levels of confidence in the mortgage market’s prospects following the December general election. That confidence reached a peak in February, before declining in March following the COVID-19 outbreak and subsequent lockdown measures.

By March, close to half of mortgage intermediaries (47%) were not feeling confident in the mortgage industry and almost four in 10 (38%) were not feeling confident in the intermediary sector. Intermediaries suggested that business slowdown, the inability to carry out physical viewings and valuations during the lockdown, and staff shortages at lenders and other firms were the key reasons for this.

The immediate impact of COVID-19 for intermediaries appeared to be felt the hardest among smaller businesses, those dealing with mover mortgages, and businesses in the Midlands (as well as the South to a lesser extent).

Claimed mortgage caseloads dropped from 88 cases to 81 in Q1, however the picture was more stable year-on-year. Business mix also remained stable for intermediaries.

Looking at actual pipeline activity, conversion from offer to completion was the main part of business flow hit by changing market conditions. The proportion of offers resulting in a completion fell from 85% in January to 73% in March.

In another report released by IMLA this week (First time buyers: is the growth sustainable), the trade body urged the government to assess the impact of post-financial crisis regulatory changes and consider easing these restrictions to help first time homebuyers lead the economic recovery in the wake of the COVID-19 pandemic.