Mortgage intermediaries remained confident in their businesses and the intermediary sector during Q2, despite a softening in market activity following the end of the stamp duty holiday in April.

This is according to the latest Mortgage Market Tracker report from the Intermediary Mortgage Lenders Association (IMLA).

Bank of England figures recorded a steep fall in overall gross secured lending from £76bn in Q1 to £58bn in Q2.

Intermediary confidence in their own businesses edged up in Q2, with a slight fall in May recovering in June. While long-term confidence remains below pre-2022 levels – before the Liz Truss mini-Budget – sentiment has stabilised following recent volatility.

IMLA’s data also suggested that confidence in the outlook for the whole intermediary sector was “broadly flat” compared with Q1, dipping in June but remaining stronger than for the wider mortgage market.

“As expected, Q2’s figures reflect the front loading of mortgage business in Q1 this year caused by the end of the stamp duty holiday in April,” IMLA’s executive director, Kate Davies, commented.

“They also reflect a market adjusting to tighter than anticipated economic conditions, given the slow pace of bank base rate cuts and continued pressure on household finances. However, intermediaries continue to demonstrate resilience and confidence in their ability to deliver.”

While confidence held firm, IMLA said its business flow indicators showed some “slight signs of strain”.

The number of decisions in principle (DIPs) dealt with fell to 30, from 33 in Q1, although this was still up compared to the levels at the end of last year. The average conversion from full application to completion decreased to 61% – the lowest since the end of 2023.

In terms of business mix, mortgages continued to make up two-thirds of intermediaries’ business, with buy-to-let (BTL) accounting for just under a quarter, despite concerns around the impact of the renters’ rights bill. Specialist lending represented around one in 10 cases. First-time buyers remained the largest customer segment.

“Activity in the BTL sector remains reassuringly buoyant, particularly in light of the concerns many have expressed over the imminent legislative changes the renters’ rights bill will impose on landlords,” Davies added.

“This is an industry used to navigating uncertainty, and brokers are continuing to support customers through a complex lending environment. As interest rates and affordability gradually improve, and as more lenders implement looser regulation such as the increased loan-to-income flow limits, we hope to see greater momentum return to the mortgage market in the second half of the year.”

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