Broker confidence took a significant hit during Q2 of 2010, with two-thirds predicting business will either stagnate or fall in the next three months, according to L&G research.
It reveals only a third of brokers believe business will get better in the coming quarter, compared to over 50% in Q1. The majority of brokers (54%) predict sales will be flat in Q3, while 12% expect things to get worse.
Nevertheless, the 122 brokers polled expect house purchase mortgages to make up 51% of their sales in the next quarter; the highest level since the index began in 2008.
By comparison, remortgage business is expected to be 31% which is the lowest level recorded since the start of 2008.
Meanwhile, the number of brokers predicting an interest rate rise in the next quarter has also risen to 14%
Stephen Smith, director of housing for L&G, says: "The Bank of England believes that the recent rise in inflation is a temporary spike, but it must be said that there is now more lingering doubt around how quickly inflation will drop.
"Some commentators have been flagging the inevitability of increases in the base rate for some time and the recently published inflation figures bring this sharply into focus."
Despite the lack of optimism in mortgage business, 42% of brokers said they expect protection sales to improve in the coming quarter.
What made financial headlines over the weekend?
'Right thing to do'
£69m spent on upgrades