Mortgage intermediaries had an unusually active start to the year, with demand driven by geopolitical turmoil.
According to the Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA), mortgage intermediaries placed an average of 96 mortgages per year, up from 89 in the first quarter of 2025.
Kate Davies (pictured), executive director of the IMLA, said the activity increase was driven by “external shock rather than underlying market momentum”.
She continued: “The Iran conflict and the swap rate volatility it triggered appears to have pulled a significant volume of mortgage business forward into the first quarter – business that might otherwise have been spread more evenly through the year.
“Intermediaries responded with their customary professionalism and efficiency, supporting borrowers through a period of genuine uncertainty.”
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Plans accelerated
The Iran conflict, which began in early 2026, caused significant volatility in swap rates and pushed inflation expectations higher, prompting economists to revise down their forecasts for bank rate cuts and leading many mortgage borrowers to accelerate their remortgaging and purchase plans.
Intermediary confidence also recovered modestly at the quarter level compared with Q4 2025, but the month-by-month picture tells a different story, diminishing as the Iran war went on.
Sentiment improved between January and February before falling away in March as the conflict unfolded, with the sharpest deterioration recorded in confidence about the outlook for the wider mortgage industry. Confidence in advisers’ own businesses remained more resilient, as it has throughout the past two years, and was the strongest of the three confidence measures with a net score of 95. Confidence in the outlook for the intermediary sector stood at 82, while confidence in the broader mortgage industry was 79 – all three remain a little below pre-Covid norms.
The IMLA figures showed stability in the rate at which decisions in principle (DIPs) led to full applications, although there was a slight fallback in the proportion of DIPs resulting in a DIP accept. This eased back to 83% from the three-year high of 86% recorded in Q4.
“While overall conversion rates have eased from the strong Q4 2025 levels, they remain within a reasonable range, and the stability of the DIP-to-full-application rate across four consecutive quarters is a reassuring signal of underlying process quality across the sector,” Davies said.
She added that the changes to Financial Conduct Authority (FCA) guidance around affordability – which have led to many lenders allowing people to borrow more – had led to a “quiet but meaningful tailwind, and one that we expect to continue supporting volumes through the rest of 2026. Intermediaries will, as ever, be at the centre of helping borrowers navigate a complex and fast-moving market”.
This follows recent comments from UK Finance that the progress of recent mortgage rule changes was already evident by the 18% rise in first-time buyer numbers in 2025 – a result of loan-to-income (LTI) adjustments.