Here at Twenty7Tec, we publish a monthly report that analyses supply and demand in the mortgage market. Amongst the key data points that we look at, search volumes across our SOURCE module reflects broker demand, and ESIS documentation production, shows where demand and supply (i.e. mortgage products) meet. We’ve reported on these two key metrics consistently during the pandemic.
Since the low point of Easter Monday, the market has, as we all know, significantly rebounded. If the Chancellor were looking for an example of a V shaped recovery, the mortgage market is probably it. Over the past three weeks, we have seen 21 of the busiest 24 days this year for total mortgage searches. Buy to Let searches had a great July and have nudged back slightly as we move into August, which is in line with seasonal norms. Over recent days, search volumes have exceeded the highs we saw in February and March. However, we are yet to surpass the ESIS documentation highs from that period.
Why are searches higher and documents not yet beating the prior highs? Simply put, because brokers are doing more searches for customers before they prepare an ESIS document. In February and March, brokers did on average 4.5 searches per ESIS document prepared for residential mortgages. In July and August, this ratio rose to 5.5 searches per document.
The line for BTL is, however, much more stable and only varies from 2.75 in Feb and March to 3.2 today. Brokers perform fewer searches for BTL mortgages because there are more products currently available and – we assume – because investors often come with more sizable deposits and so have greater certainty over what they are looking for in the first place.
Our sense is that given the broader economic volatility, it would be impossible to predict how the market will perform over coming months. But what is possible is to make sure that you are as well positioned for the future of our market as possible by investing in the technologies and systems that will form the bedrock of a fully functioning market in 2021 and beyond.
Much work continues to be done by both lenders and intermediary technology businesses in developing new solutions that can make the process of searching, applying for and obtaining a mortgage simpler, faster and more efficient. We have already seen Covid-19 speed up adoption of some technologies, such as AVM’s, and we expect the pace of change to continue to accelerate. Those businesses who place technology at the very heart of their processes will be well placed to excel in whatever our new normal looks like.
THIS MONTH’S VISIONARY
James Tucker founded Twenty7Tec Group in 2015. The company designs and builds technology that makes the process of searching, applying for and obtaining a mortgage simpler, faster and more efficient. James also previously worked as a stockbroker, a fully qualified Investment Adviser, and as an investment analyst at a private equity firm.