Sentiment holds steady as lending volumes fall post-Stamp Duty change
Mortgage intermediaries maintained their confidence in both their own operations and the broader intermediary sector during the second quarter of 2025, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA).
This comes as overall market activity slowed following the conclusion of the Stamp Duty holiday in April. Bank of England data also revealed that gross secured lending dropped sharply, falling from £76 billion in the first quarter to £58 billion in the second quarter.
Intermediaries’ confidence in their businesses saw a modest rise in Q2, with a dip in May followed by a recovery in June. Although long-term sentiment remains below levels seen before 2022, confidence has stabilised after recent fluctuations.
Outlook for the intermediary sector was largely unchanged from the previous quarter, with a slight decline in June, yet remained more positive than for the wider mortgage market.
The average annual number of cases handled by intermediaries increased to 102, up from 95 in the previous quarter.
Despite the steady confidence, which was also reflected in Nottingham Building Society’s recent broker survey, some business flow indicators showed signs of pressure. The average number of decisions in principle (DIPs) processed fell to 30, down from 33 in Q1, but remained above figures recorded at the end of last year. The conversion rate from full application to completion dropped to 61%, the lowest since late 2023. Similarly, the conversion from DIP to completion declined by seven percentage points to 35%, matching the level seen in the final quarter of 2024.
Regarding business composition, residential mortgages continued to account for around two-thirds of intermediary activity, while buy-to-let made up just under a quarter, despite ongoing concerns about the Renters’ Rights Bill. Specialist lending comprised roughly one in 10 cases, while first-time buyers remained the largest group of clients.
“As expected, Q2’s figures reflect the front loading of mortgage business in Q1 this year caused by the end of the Stamp Duty holiday in April,” said Kate Davies (pictured), executive director at IMLA. “They also reflect a market adjusting to tighter than anticipated economic conditions, given the slow pace of bank base rate cuts and continued pressure on household finances.
“However, intermediaries continue to demonstrate resilience and confidence in their ability to deliver. Activity in the buy-to-let sector remains reassuringly buoyant, particularly in light of the concerns many have expressed over the imminent legislative changes the Renters’ Rights Bill will impose on landlords. This is an industry used to navigating uncertainty, and brokers are continuing to support customers through a complex lending environment.”
For Mark Harris, chief executive of mortgage broker SPF Private Clients, ‘resilient’ is a much used word to describe the housing market and broker confidence is no different.
“The mortgage market for 2025 has had its ups and downs but predictions for this year and 2026 remain positive and more importantly, show growth,” Harris said.
“All cohorts of borrowers—whether first-time buyers (with the new schemes available), those remortgaging (coming off a two- or five-year fix), or purchasing their next home—should seek advice. Clients’ situations are increasingly complex, and borrowers cannot afford to get it wrong. Obtaining advice provides borrowers with a level of protection against that.”
Davies hopes that as interest rates and affordability gradually improve, and as more lenders implement looser regulation such as the increased loan-to-income flow limits, greater momentum will return to the mortgage market in the second half of the year.
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