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.
2 responses
If lenders and the world at large want to address long completion times they could:
– retake the source of funds burden as they are fca regulated and obligated to tackle this issue and shouldn’t be offloading this task onto solicitors because they are too lazy to do their own checks at the start of the transaction- 3 months bank statements through the broker is a joke if it doesn’t cover the deposit amount. Just a clue average yearly salary is 25k average deposit is double that. 3 months will likely never be enough.
– limit our liability for aml where there is no reasonable way we could have known and we have done everything we could to investigate.
– be more clear on lender requirements or limit them as many of their replies in uk finance handbook are “refer it back to us.” Taking an early view can save time. You don’t want 5th floor bsa flats? Great don’t lend on them.
-Some lenders have so many additional special conditions to be satisfied it could be its own full time job. We have an element of professional judgement – let us use it. If you don’t trust that factory law firm to exercise it how about you don’t put them on panel.
-Local search times – govt. I’m looking at you. 0 support and infrastructure provided during key periods e.g sdlt holidays meant the qualified conveyancing industry shrank by such an astounding proportion. Knowledge and skill disappeared. Apologise, say it won’t happen again, invest in reducing council local search times. Make it mandatory that their records are accessible online. Docs online and available – quick turnaround shocking. Yes people will pay to access it. They shouldn’t have to but they will to move. I understand this is all moving to the land reg. great. will we see this in the coming century?! How about we step it up. Prioritise this as people care about moving quickly.
– mandatory tax registration – scrap it. Most clc firms aren’t authorised to give tax advice. Too many regulatory bodies and HMRC are notoriously diabolical in providing guidance. What are these new standards for these not really tax advisors when the majority of lawyers submit a return as agent? Hint – there aren’t any. Where is the govt investment in ensuring retraining/training for a whole industry is provided for a stupid highly contested change? There isn’t any.
Conveyancers are expected to absorb every additional requirement without further resource or infrastructure. They’re also criticised about “offloading the cost” conveyancing is expensive and we don’t charge nearly enough. An agent will charge 1%+vat of purchase price for a fraction of the work and people pay it without blinking. A solicitor asks for generally a fraction of this and is criticised but our burden is higher. The general population needs to get a clue and get real too. Yes you need to pay for expertise and the fraction we charge isn’t nearly enough. I’m genuinely debating a similar to estate agent pricing strategy.
Well said Kim. The “think tanks” advocating “digitisation” need to get a grip as to what is happening on the ground – higher unemployment, rising mortgage interest rates, properties that are actually unmortgageable, buildings that are actually unsafe to live in, people with money all over the place. “Data” only tells one part of the story and the public are not going to be paying conveyancers before knowing their offer has been accepted.
The devil will not be in “producing” the data, it is the interpretation of it and the public are being mislead by all of these organisations thinking their move will be sped up.
People’s circumstances can change at a drop of a hat, yet there is more pushing for people not to be able to ‘back out’ of deals. Speed (which should be treated with caution as ‘driving too fast’ can cause accidents) is not the answer. Nothing much is actually going to change unless the “chains” system is dealt with. But of course, the government have messed up opportunities for renting also by reducing the pool of properties available for rent by pushing Landlords out of the rental market.