Confidence in the mortgage market is showing healthy signs of recovery following the disruption of the mini-budget in September 2022, judging by the latest mortgage market tracker report from the Intermediary Mortgage Lenders Association (IMLA).

The average number of Decisions in Principle (DIPs) that intermediaries processed in Q4 fell slightly by two when compared to Q3 2022, reaching the level seen two years ago in the final quarter of 2020. Despite a drop in November (to 23 per intermediary), December saw a rebound, rising back up to 26 and matching the levels seen in July and August of 2022. 

In Q4, the conversions of DIPs to completions also fell very slightly by 1% from Q3 2022, down to 37%. The business area and region seeing the biggest drop in conversions were in directly authorised DIPs and brokers operating out of the South of England, seeing falls of 11% and 6% respectively during Q4. Conversions for first-time buyers and buy-to-lets also remained steady with slight falls of 3% and 2%, reflecting a strong mortgage pipeline in the face of the macro-economic challenges now facing FTBs and some BTL landlords.

The dent in confidence caused by the mini-budget and resultant market volatility was evident in the data, with 29% of intermediaries reporting in Q4 2022 that they were ‘not very confident’ about the outlook for the mortgage industry, rising from just 4% during the same time period in the previous year. However, the most prominent dip in confidence for Q4 was during October, with November and December showing signs of stabilisation – returning to a 70% proportion of intermediaries who felt either ‘fairly confident’ (56%) or ‘very confident’ (14%) in December. 

Comparatively, intermediary confidence in their own business declined only slightly. In Q4, 11% of intermediaries reported being ‘not very confident’ in the outlook for their business, rising from the 5% reporting the same in the previous quarter. However, overall, 87% of intermediaries still reported that they were either ‘very confident’ or ‘fairly confident’ in their own business outlook during the final quarter of 2022 – a dip of only 7% from Q3 despite the October disruption and rising interest rates.

Kate Davies, executive director of the IMLA, commented: “There are green shoots here, with December marking a noticeable increase in confidence compared to October. The Bank of England’s continuing action to bring inflation under control, combined with strong competition amongst lenders to attract new business, are good indicators of recovery.”

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