Buy-to-let grows 49% as intermediaries dominate mortgage sector

Three fifths of mortgage business (82%) now goes through intermediaries whilst the buy-to-let sector has grown by 49% year-on-year, according to the 2016 Mortgage Efficiency Survey conducted by IRESS.

The research indicates that intermediaries continue to dominate the mortgage market with more than three quarters of sales going through this channel.

And almost three-quarters (70%) of lenders experienced an increase in the number of applications submitted by brokers over the last year.

Mortgages to first-time buyers saw a 0.7% increase whilst residential loans to homemovers fell by 5.6%.

The survey analysed the responses of 18 lenders, with a combined share of gross mortgage lending of 68% in 2015, equating to £152bn of loans.

Overall, the study shows that acceptance through a number of sales channels declined significantly, with acceptance in branch dropping by 20%, in consumer by 18%, by 15% over the telephone, and by 9% in the intermediary channel.

According to the research, the Mortgage Market Review (MMR) has had a significant impact, with average number of days to offer – a key measure of efficient customer service – significantly higher than pre-MMR levels, although there has been a slight improvement over last year.

Lenders’ use of digital technology grew over the last year, with mobile quote and decision in principle increasing by 185%, case tracking by 72% and the use of technology in full mortgage applications by 117%.

Henry Woodcock, principal mortgage consultant at IRESS, said: “The most significant finding in the survey is the continued rise of the buy to let market.

“This sector has increased by more than 213% over the five years since the first IRESS Mortgage Efficiency Survey, but with the recent change of taxation around investment purchases for landlords, it seems unlikely that this stellar growth will continue.

“In the last year, loans to first time buyers have been fairly flat, suggesting that despite government incentives and innovative products offered by lenders, the struggle to get on the housing ladder remains a significant challenge.

“The survey also shows that two years on, MMR continues to impact the time taken to process mortgage cases.

“We believe that the average number of days to offer will only improve significantly when the valuation process is fully digitalised and developments in sharing of current account and credit data come to fruition to enable lenders to use automated income and expenditure verification.”

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