Less than two thirds of mortgage offers hit completion as lenders struggle with demand
The number of mortgage offers making it through to completion has tumbled, as product availability and operational challenges in the market block progress, according to the Intermediary Mortgage Lenders Association (IMLA).
Just 59 per cent of offers resulted in a completion in the second quarter of 2020, compared to 85 per cent pre-Covid in the final quarter of 2019, the trade association found.
The number of decision in principles (DIPs) being processed by intermediaries also fell from 24 per adviser in the first quarter of the year to just 17 in the following three months, along with every other stage of the application process.
However, case volumes for intermediaries over the year increased from a low of 81 in March to 87 in June, as buyers returned to the mortgage market after lockdown.
Almost two thirds of adviser cases in Q2 2020 stemmed from residential activity, of which a quarter consisted of refinance activity, along with 20 per cent from movers and 19 per cent from first-time buyers.
Broker confidence stable
And despite the disruption to business, overall adviser confidence in the mortgage market lifted in the second quarter of the year.
The number of brokers feeling confident in the outlook increased to 88 per cent, from 85 per cent in the previous quarter – though this remains below 2019 levels.
Kate Davies, executive director of IMLA (pictured), said: “Thousands of consumers are returning to the housing market after putting their plans on hold, while other buyers are looking to take advantage of the temporary stamp duty holiday.
“This doesn’t mean that the mortgage market is free from further challenges though.
“Lenders already faced a backlog of applications when the housing market reopened in May and this, combined with high levels of new demand from buyers is adding to operational pressures.
“In some cases, applications are being delayed as lenders continue to adapt to the new normal, while supporting existing customers, in particular those who have come or are coming to the end of payment deferral periods.
“With the government’s furlough scheme set to end in October, it remains to be seen how many jobs will have been saved and what the shape of the economic recovery will be.
“It’s too early to say whether the demand we are currently seeing in the mortgage market will last, but for the moment it is clearly keeping intermediaries busy and positive, as they work through a wave of applications from hopeful buyers.”