Lenders will turn their attention to lengthening completion times to improve margins and cut costs according to home buying and selling transformation consultants Novus Strategy, as mortgage data reveaed a record value of mortgage cancellations in the first quarter of 2026.
A comparison of mortgage approvals and cancellations revealed 35,144 mortgage cancellations in Q1 2026; a 6.1% increase in cancellations year on year, the value of which is an estimated £8.7 billion. The figure represents a record high, up 12.3% on £7.7 billion in the same quarter last year, despite a 2.7% fall in the number of mortgage approvals in the final quarter of last year compared with the same quarter a year earlier.
Mortgages are cancelled for various reasons, Novus explained, and volatility in interest rates can be a major contributory factor. “A borrower may have multiple mortgage offers, could switch to take advantage of falling rates or back out of a sale altogether,” the company said.
CEO Claire Van der Zant added: “The sheer weight of cancellations continues to inflict a lot of pain on lenders. This is one of the most-watched metrics inside banks and building societies, and these industry-wide figures illustrate the scale of the problem but also the opportunity.”
Every cancelled mortgage represents a direct operational loss to lenders with incurred processing, valuation and underwriting costs regularly running into thousands of pounds per case, none of which is recoverable, Novus pointed out. Lenders must also maintain sufficient capital and liquidity against every outstanding mortgage offer until it either completes or is cancelled. With £8.7 billion of approvals not taken up in a single quarter, there is a significant volume of capital committed to loans that will never be advanced, the company explained.
In-keeping with much of the commentary around fall throughs, long completion times compound the problem. The longer an offer sits in the pipeline, the greater the exposure to changing borrower circumstances, chain collapses and rate movements that lead to cancellation. According to property data specialists TwentyCi, the time between sold subject to contract and exchange reached 134 days in Q1 of this year, contributing to the 67,489 transactions which fell through post-offer.
“For lenders, every additional week in the pipeline is another week of capital tied up, underwriting assumptions ageing, and cancellation risk growing. The risk of chains collapsing grows the longer the wait,” Novus said.
Bringing down completion times is an important metric for lenders, the company added, as it has far greater potential to improve margins and lower costs than time to offer.
Van der Zant explained: “Reducing the volume and value of cancellations is one of the easiest ways lenders can boost their bottom line over the next decade but the solution is not an inward-facing one. A revolution is unfolding in homebuying, but it’s one that requires everyone involved to take an ecosystem view, not least because the homebuying journey is being redesigned.
“It’s no longer about internal digitisation, it’s about wider transformation delivered by integrating horizontally for interoperability. We’ve got to bring speed-to-completion down and allow everyone, including businesses, to share in the benefits of a more efficient property market.”
Whereas parties involved in housing transactions and lending may have mastered internal digitisation, it is interoperability across all these organisations that promises to truly transform the home buying process, she added.
In line with the development of Open Banking and Open Finance, The Open Property Roadmap was published this week to demonstrate how Smart Data principles, based on secure, consent-driven and interoperable data sharing, can transform the property transaction lifecycle by reducing delays, improving transparency, and strengthening trust.
Horizontal Digital Integration (HDI) is the operating model that brings all the components parts of the property transaction together so evidence, data and decisions move predictably across the whole journey, not just within individual firms.
