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Buy to let boom continues, yet first time buyers struggle, finds IRESS PDF Print E-mail
Thursday, 06 October 2016
The buy to let sector continues to go from strength to strength, according to the latest edition of the Mortgage Efficiency Survey conducted by IRESS, the leading supplier of technology for wealth management, financial markets and the mortgage industry. 

The survey provides insight across many aspects of the mortgage market and application processing. Now in its fifth year, the 2016 survey analysed the responses of 18 lenders, with a combined share of gross mortgage lending of 68% in 2015, equating to £152bn of loans. Among the survey participants, the buy to let sector saw by far the largest year-on-year growth at 49%, while mortgages to first time buyers saw just a 0.7% increase and residential loans to home movers actually fell by 5.6%.

The intermediary channel continues to see the lion’s share of the mortgage market, with 82% of sales now going through this channel and almost three quarters (70%) of lenders experiencing an increase in the number of applications submitted by brokers over the last year. The direct channel continued to decline across branch and telephony, although sales via the internet increased, albeit from a low base. The internet channel remains a relatively small part of distribution, but as new digital entrants and so called “digital” brokers enter the market, this channel could double in the next 18 to 24 months.

A further key finding was that the number of accepts has declined in all sales channels: with accepts in branch dropping by 20%, in consumer by 18%, in telephony by 15% and by 9% in the intermediary channel. Banks have a significantly higher percentage of accepts than mutuals, likely to be due to banks investing in more sophisticated decisioning and income verification, differences in risk appetite and application complexity.

The survey results show that the impact of the Mortgage Market Review (MMR) is still apparent, 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 full mortgage application by 117%. More lenders are now providing direct and in-branch video links to mortgage advisers, offering more options to consumers and enabling more direct sales per adviser to be processed.

Henry Woodcock, Principal Mortgage Consultant, IRESS, commented: “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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