"First-time buyers’ struggles have been highly publicised, with affordability stretched by rising house prices"
According to the report, the average number of enquiries received by intermediaries serving this segment of the market rose from 55 in Q1 2016 to 60 in Q1 2017. The proportion of enquiries leading to applications in principle also increased from 51% to 57%
The rate of first-time buyer applications resulting in completions has been steadily improving over the past year. In Q2 and Q3 2016, 49% of first-time buyer applications to intermediaries resulted in completions, increasing to 53% in Q4. Comparing year-on-year, it means the ratio of first-time buyer completions has improved more than any other segment of the market.
The rate of mortgage applications resulting in completions across the intermediary channel reached 69% in Q1 2017 – the highest level since IMLA's tracker was launched in Q1 2016. This is 11% higher than the 58% recorded a year ago, and 4% higher than in Q4 2016.
The tracker also shows that the specialist segment of the mortgage market – which includes adverse credit mortgages, equity release and self-build mortgages – performed particularly well in Q1 2017. Two thirds (67%) of specialist applications via intermediaries resulted in completions, up 11% from Q1 2016 and 6% from Q4 2016.
Furthermore, the average number of enquiries received by intermediaries in this area of the market increased by 9 from 48 in Q4 2016 to 57 in Q1 2017. Remortgaging was the only other market segment which saw more consumer enquiries during the first quarter of 2017 than the final quarter of 2016.
Regulatory changes have also increased the complexity of the buy-to-let mortgage market, and there is evidence growing numbers of borrowers are turning to the intermediary channel as they seek to reassess their portfolios and investment strategies. The average number of BTL enquires received by intermediaries increased by 5 from 52 in Q1 2016 to 57 in Q1 2017, while the rate of applications resulting in completions rose by 8 percentage points from 60% to 68%.
Peter Williams, Executive Director of IMLA, commented: “First-time buyers’ struggles have been highly publicised, with affordability stretched by rising house prices and modest income growth. However, rising levels of mortgage enquiries, applications and completions shows that a significant number of first-time buyers are still both willing and able to get a foot on the property ladder.
Low mortgage rates have contributed to this improving outlook for first-time mortgage borrowers. However, with the Bank of England reporting that average rates are creeping up on the higher loan-to-value products that buyers with modest deposits rely on, policymakers must continue to do their upmost to support lending to this part of the market.
The improving ratio of enquiries and applications to mortgage completions over the last year is a testament to the success of the intermediary channel in matching consumers with suitable products in a complicated and competitive marketplace. The intermediary channel is well placed to deal with the needs of the growing number of borrowers with non-standard circumstances, which is reflected in intermediaries’ high levels of confidence. In Q1 2017, 99% of intermediaries reported they were confident in the outlook for their business, with a further 64% reporting they were very confident.”
