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Remortgage completions hit 2016 peak in Q3: IMLA

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The proportion of remortgage applications resulting in lender offers increased to 80 per cent in Q3, from 77 per cent in Q2, the latest IMLA Mortgage Market Tracker has revealed has revealed.

The proportion of offers that subsequently resulted in a completion also increased in Q3 to 83 per cent, up from 77 per cent in the second quarter.

As a result, 67 per cent of remortgage applications completed in Q3, the highest percentage seen in any quarter since IMLA began tracking this at the start of the year.

The quarterly report – which uses data from BDRC Continental – follows mortgage applicants’ journey through the approval process from their initial enquiry right the way through to completion. The tracker divides the results by firms dealing with first-time buyers, home-movers, remortgagors, buy-to-let borrowers and applicants for specialist loans.

IMLA executive director Peter Williams (pictured) says the 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,” he says. “Rates are unlikely to fall much further, given that they are priced against swap rates, but the sustained 0.25 per cent base rate means they are also unlikely to rise – which should encourage further remortgage activity.”

The tracker also shows that firms experienced a significant jump in the number of remortgage enquiries they received in Q3. In Q2, intermediaries received an average of 38 enquiries, which increased to 48 in Q3 – a rise of 26 per cent.

Summary table: Borrowers’ progress through the intermediary channel, Q3 2016

 

All

FTBs

Movers

Remo.

BTL

Specialist

Average number of enquiries

46

52

40

48

43

45

Initial enquiries to AIPs

58%

55%

58%

62%

58%

59%

AIPs to full applications

70%

66%

73%

74%

71%

66%

Applications to offers

75%

71%

78%

80%

75%

72%

Offers to completions

74%

69%

76%

83%

73%

72%

AIPs to completions

39%

32%

44%

50%

38%

34%

Applications to completions

56%

49%

59%

67%

55%

52%

The tracker also reveals that the referendum result did not significantly affect the flow of customers through the mortgage approvals process, according to IMLA. Between Q2 and Q3, there was a small decrease in the rate of borrowers whose initial enquiries resulted in agreement in principles (AIPs) from 59 per cent to 58 per cent. Furthermore, the rate of mortgage offers being completed fell marginally from 75 per cent in Q2 to 74 per cent in Q2.

However, 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 per cent in Q2 to 45 per cent 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.

“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,” says Gwilliam.

“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.”

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