Confidence among mortgage intermediaries declined in the final quarter of 2024 following October’s Budget, reversing improvements seen earlier in the year, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA).

The report shows that while confidence had rebounded in the second and third quarters, by the end of the year it had returned to levels last seen in Q1 2024. In Q4, 22% of intermediaries described themselves as ‘very confident’ in the market outlook, 65% as ‘fairly confident’, 10% as ‘not very confident’ and 2% as ‘not at all confident’—figures almost identical to those recorded at the start of the year.

OPTIMISM IN THE INTERMEDIARY SECTOR

Despite a more cautious outlook for the wider mortgage market, brokers maintained greater confidence in the intermediary sector itself. By December, 41% said they were ‘very confident’ in the sector and 51% were ‘fairly confident’, an improvement over the quarter.

Optimism about their own businesses remained the strongest measure, as it had throughout 2024. In Q4, 42% of brokers said they were ‘very confident’ in their business and 53% ‘fairly confident’. These figures rose month-on-month, with December recording 56% in the ‘very confident’ category and 41% in the ‘fairly confident’.

MARKET TRENDS AND SECTOR BREAKDOWN

The distribution of mortgage business remained largely unchanged from previous quarters. Residential lending continued to account for around two-thirds of all intermediary business, while buy-to-let activity edged down to 22%. Specialist lending saw a slight increase, making up 12% of transactions.

First-time buyers continued to be the most active group in the residential market, representing around one-third of cases. Remortgaging and product transfers were evenly split, each making up just under a quarter of residential transactions.

IMPACT OF ECONOMIC AND POLICY CHANGES

IMLA executive director Kate Davies said that the October Budget had impacted market confidence but noted that the Bank of England’s interest rate cut in November may have contributed to a more positive outlook by the end of the year.

She said: “October’s Budget dealt a blow to UK confidence across the board, including the mortgage market. However, November’s interest rate cut and a more dovish approach from the Bank of England may have contributed to the boost in sentiment at the end of the year,” she said.

Davies also highlighted the resilience of mortgage intermediaries despite wider market challenges.

“Throughout 2024, intermediaries have consistently expressed more confidence in their own businesses than the market itself, which is testament to their faith in their ability to keep delivering in the face of adversity.”

Looking at sector trends, she noted that buy-to-let activity had declined in response to tax changes and regulatory pressures, while specialist lending had seen modest growth.

“It is no surprise that buy-to-let has contracted slightly given the current conditions, the increase in Stamp Duty and the looming Renters’ Rights Bill, while a gradual rise in the proportion of specialist cases makes sense in an increasingly complex and challenging economic environment.”

She also suggested that remortgaging could gain traction over product transfers in 2025 if affordability improves.

“It will be interesting to see whether remortgaging starts to take dominance over product transfers in the year ahead, as falling rates should improve affordability and provide more opportunities for existing borrowers to shop around the whole market with the help of their broker.”