"Conditions in the mortgage market were particularly good for remortgagors in Q3, with noticeable increases in the number of applications resulting in offers and subsequent completions."
A higher proportion of remortgage applications resulted in lender offers in Q3 2016, despite the fallout from the Brexit vote, according to the Intermediary Mortgage Lenders Association.
Its research revealed that 80% of remortgage applications resulted in an offer in Q3 2016 – up from 77% in Q2 2016. The proportion of offers that subsequently resulted in a completion also increased to 83% in Q3, from 77% in Q2.
As a result, 67% of remortgage applications completed in Q3: the highest percentage seen in any quarter since IMLA began tracking this at the start of the year.
Firms also experienced a significant 26% jump in the number of remortgage enquiries they received in Q3, rising to 48 enquiries from 38 in the previous quarter.
CML lending figures show that a total of £17.5bn was lent to homeowners for remortgaging in Q3 2016 – an increase of 4% on Q2’s £16.7bn and the highest quarterly total since before the financial crisis.
IMLA's research also found that the referendum result did not significantly affect the flow of customers through the overall mortgage approvals process. Between Q2 and Q3, there was a dip of just 1% in the number of applications resulting in offers and subsequent completions.
Yet intermediaries reported an average of 46 enquiries in Q3 – two more than the 44 average recorded in Q2, which suggests that appetite for borrowing continued to increase. Furthermore, the rate of completions per 100 applications remained unchanged between the two quarters, while the rate of completion per 100 agreement-in-principles and per 100 enquiries increased marginally.
The proportion of intermediaries who reported being ‘very confident’ in the mortgage industry’s outlook increased by six percentage points from 39% in Q2 to 45% in Q3. The proportion of brokers who reported being ‘very confident’ in the prospects for the intermediary sector and their own businesses dipped slightly however, with an increase in the number who reported being ‘fairly confident’. Overall, confidence remains lower than it was a year ago.
Peter Williams, Executive Director of IMLA, commented: “IMLA’s latest tracker shows that conditions in the mortgage market were particularly good for remortgagors in Q3, with noticeable increases in the number of applications resulting in offers and subsequent completions. The low interest rates available to borrowers almost certainly contributed to this increase, with borrowers able to switch on to very attractive deals. Rates are unlikely to fall much further, given that they are priced against swap rates, but the sustained 0.25% base rate means they are also unlikely to rise – which should encourage further remortgage activity.
“After a dip in the run-up to the EU referendum in June, the number of overall enquiries increased in Q3, with would-be borrowers showing faith in the market. Despite macro-economic uncertainty and short-term volatility, there was only a slight dip in the proportion of enquiries progressing to an AIP – demonstrating that borrowers were keen to push on with their intentions. The rate of applications resulting in offers was also unchanged – suggesting that lenders were willing to meet demand.
“2016 has been a tumultuous year for the market, with the changes to Stamp Duty and the Brexit vote both affecting activity, and it is therefore unsurprising to see that intermediary confidence dipped slightly. However, the market has proved itself much more robust than many predicted it would be, and the industry is in a good place to continue this momentum in to 2017.”