More than half of brokers are “very confident” in the outlook of their firms in the second quarter of the year, according to the Intermediary Mortgage Lenders Association (Imla), although this view slipped on the previous three months.

Around 52% of intermediaries are “very confident” in the outlook for their firms in the three months to June, says the Imla’s Mortgage Market Tracker, down from 62% in the first quarter.

The report adds that demand in the mortgage market “remains strong”, as intermediary case volumes remained at the same level, 97 cases, in the second quarter as the first three months of the year.

The report comes amid growing concerns about the cost of living crisis, which last week saw the Bank of England hike interest rates by 50 basis points, lifting interest rates to 1.75%, the highest rise in 27 years. Inflation stood at 9.4% in June, a fresh 40-year high.

However, the trade body says broker confidence in the overall industry “remains high”, although “down slightly” quarter on quarter.

It says 89% of intermediaries feel confident overall about the direction of the industry in the three months to June, compared to 94% in the first quarter.

There was a similar pattern for confidence in the outlook for the intermediary sector, with overall confidence levels at 93% in the second quarter, down from 96% in the first three months of the year.

The report found that the average number of decisions in principle processed by brokers slipped in the second quarter to 28, from 32 in the first three months.

But added that these levels picked up in June, to 31 decisions in principle per intermediary, compared to the beginning of the quarter, which began at a rate of 26 decisions in principle per broker.

The study adds that in the second quarter, conversion rates from decisions in principle to completion fell for the third successive quarter to 43%, from 44% in the first quarter, returning to the same level as 12 months ago.

“This conversion rate mirrors that achieved in the same quarter last year,” says the report.

Imla executive director Kate Davies adds: “Our second quarter data suggests that, despite a slight drop, advisers are continuing to respond to demand in the mortgage market by helping buyers to find new products for their housing ambitions or to remortgage. The data from the second quarter of 2022 shows a strong level of activity and overall good confidence in the sector.

“With inflation levels and interest rates reaching the highest levels in more than a decade, and the cost-of-living crisis continuing to affect millions in the UK, we expect to see more borrowers with complex financial situations seeking support from the mortgage market. Fortunately, there are now many lenders that are willing to lend to complex borrowers, and plenty of mortgage options available to these individuals.

“Advice will also be crucial for these borrowers, and advisers will play an important role in helping those with complicated and complex financial circumstances find the most suitable deal.”