"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."
The research from the Intermediary Mortgage Lenders Association found that average enquiries fell in Q2 as buyers showed caution in the run-up to the referendum, but said that the mortgage market remained in "robust health".
Intermediaries dealt with an average of 44 new enquiries in Q2, down from 49 in Q1. 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 in Q2, compared to 48 in Q1.
However, overall more enquiries in Q2 translated into AIPs (59%, up from 55% in Q1) Overall, homemovers saw the highest conversion rate at 61%, followed by remortgagers at 60%, buy-to-let at 59%, and specialist loans at 58%.
According to brokers, lender decisions to decline applications accounted for less than a quarter (23%) of dropouts in between AIP and the completion stage in Q2, down from 28% in Q1.
The data shows that 67% of AIPs progressed to an application in Q2, down slightly from 69% 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.
IMLA says borrower drop-outs are typically caused by factors such as affordability constraints; some aspiring borrowers making initial enquiries without looking to progress immediately; and others shopping around and exploring their options via multiple firms or channels.
Of those borrowers receiving offers, 75% progressed to completion in Q2 compared to 76% in Q1.
Peter Williams, Executive Director of IMLA, commented: “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. This is encouraging news for the many borrowers who will continue to rely on the mortgage market to move onto or up the housing ladder.
“Next quarter we will have a clearer view of the consequences of the Brexit vote – though this is by no means the only element impacting upon supply and demand in the market. The increased tax burdens for landlords from stamp duty reforms, changes to the wear and tear allowance, and the upcoming reduction in interest relief, may see many remortgage to a lower rate as one way of clawing back some lost income."
