First-time buyers saw a higher proportion of mortgage approvals in the months preceding the EU referendum vote.
Approvals for first time buyer rose 6 per cent from 51 per cent in the first quarter to 57 per cent of enquiries resulting in agreement-in-principles during the second quarter. The Intermediary Mortgage Lenders Association, using data provided by BDRC Continental, examined applicants’ journey through the intermediary channel from initial mortgage enquiry through to completion.
Findings were based on interviews between April and June with 300 UK intermediaries who arrange a minimum of 24 mortgages per annum and are not tied wholly to a single lender, weighted by firm size and type, to be representative of the whole sector.
It found the market remained in “robust health” in the lead up to Brexit, with lenders remaining open for business despite average enquiries falling in April, May and June as buyers showed caution in the run-up to the vote.
Brokers dealt with an average of 44 new enquiries in the second quarter, down from 49 in the first. The average number of enquiries received from first-time buyers and homemovers was 46, both down from 55 in Q1. Remortgagors showed slightly more caution, with average enquiry levels dropping to 38 per intermediary, compared to 48 in Q1.
However, overall more enquiries in the second quarter translated into approvals in principle (59 per cent, up from 55 per cent in Q1) as lenders remained keen to support borrowers despite the political uncertainty.
According to brokers, lender decisions to decline applications accounted for less than a quarter (23 per cent) of dropouts in between AIP and the completion stage in Q2, notwithstanding the option for those affected to keep progressing their application via another lender. This compares to 28 per cent in the first quarter.
Borrowers’ progress through the intermediary channel, Q2 2016
All | FTBs | Movers | Remo. | BTL | Specialist | |
Average number of enquiries | 44 | 46 | 46 | 38 | 45 | 48 |
Initial enquiries to AIPs | 59% | 57% | 61% | 60% | 59% | 58% |
AIPs to full applications | 67% | 62% | 69% | 70% | 67% | 66% |
Applications to offers | 75% | 71% | 79% | 77% | 74% | 76% |
Offers to completions | 75% | 69% | 81% | 77% | 75% | 75% |
AIPs to completions | 38% | 30% | 44% | 42% | 37% | 38% |
Applications to completions | 56% | 49% | 64% | 59% | 56% | 57% |
The market tracker showed 67 per cent of AIPs progressed to an application in Q2, down slightly from 69 per cent in Q1. This proportion remained higher amid firms focusing on homemover and remortgage cases, but every borrower type showed slightly more caution than in Q1, which Imla put down to prevailing political uncertainty.
Of those borrowers receiving offers, three quarters progressed to completion in Q2, down by one percentage point from Q1.
The index also tracks business confidence among intermediary firms on a quarterly basis. Outlook improved in the three months leading up to Brexit, with more brokers reporting being ‘very’ confident for the future than in Q1.
Peter Williams, executive director of Imla, said a dip in enquiry volumes is no more than might be expected in an atmosphere of growing uncertainty. “It suggests some buyers reined back on purchasing property in Q2, possibly waiting to see the outcome of the EU referendum and any impact on property prices.
“However, those that pressed on with a mortgage enquiry saw more success in getting an agreement-in-principle, as lenders continued supporting the market despite the political headwinds.”
