Mortgage brokers saw a return to strong activity levels and high conversion rates in Q1, with small advice firms delivering a stellar performance.
Results from the Intermediary Mortgage Lenders Association’s (IMLA’s) latest market report showed a recovery in average business levels from 80 cases per year in Q4 2024 to 95 cases per year, the long-term trend, during the first three months of the year.
The average number of decisions in principle (DIPs) processed by brokers rose by five points quarter-on-quarter to 33, the highest number since Q2 2024.
The conversion to offer ratio, meanwhile, rose to 89%, its highest proportion in three years.
Offers resulting in completion remained stable at 76%, while the conversion ratio of full application to completion was recorded at 68%, continuing its gradual upward trend.
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Small brokerages deliver strong results
Some of the strongest increases in activity were recorded by advice firms with one or two advisers. This category of firms beat the industry average for DIP accepts, resulting in a full application achieving 78% following a seven percentage point rise quarter-on-quarter, compared to 74% across the board. Firms with 100 or more advisers scored a conversion rate of 67%.
Strong results by one- and two-person brokerages were also recorded for full applications, resulting in an offer with a conversion rate of 90%, an eight percentage point rise on the previous quarter. Although firms with 100-plus advisers achieved a 91% conversion rate, they only saw a quarter-on-quarter improvement rate of one percentage point.
Meanwhile, offers resulting in completion were 79% for small advice firms, the highest percentage conversion rate among all types of advice firms, following a four percentage point rise.
Mortgage broker confidence rebounds
IMLA’s Mortgage Market Tracker also revealed that intermediary confidence in their own business, the outlook for the intermediary channel and the mortgage industry rebounded to near record highs.
Kate Davies (pictured), executive director of IMLA, said: “These results suggest that, despite global economic and political uncertainty, the continued resilience of the UK housing market and the falling interest rate environment have combined to boost morale among mortgage intermediaries.
“The end of the stamp duty concessions on 1 April will have contributed somewhat to the uplift in average case numbers. However, the fact that first-time buyer business accounted for a smaller proportion of residential activity than remortgages and PTs demonstrates a more general recovery of business levels.
“With affordability continuing to improve as rates come down and the regulator encouraging more lender flexibility, brokers seem confident that these higher levels of activity may continue later into the year.”