Challenges in the Remortgage Market
Mortgage brokers are facing unprecedented challenges in today’s remortgage market – the ebb and flow of demand has been anything but predictable, driven by Government policies, economic headwinds, and ever-shifting homeowner needs. Brokers are at the forefront of assisting clients, and in these tumultuous times, finding efficient solutions is paramount.
Government Policies and Economic Factors
Variations in remortgage demand are a reality that mortgage brokers are keenly aware of. Government support, the allure of interest-only repayments, and the stamp duty moratorium triggered a wave of new purchases. According to the FCA, this has resulted in around 500,000 homeowners locked into low 2-year fixed mortgage rates, that are coming to an end between November and January with a lot of fixed rates now at a comparatively eye-watering 6%.
Current Mortgage Rates and Borrower Dilemma
Economic indicators may hint at falling interest rates in the medium to long term, so borrowers who do fix on the higher rates of today could end up balancing early repayment penalties against potential rate savings in the future. Both scenarios point to borrowers potentially needing to remortgage quickly to avoid being out of pocket. Yet, the challenges extend beyond clients’ decision-making. The question that echoes through the industry is whether conveyancers can manage the escalating volume and ever-tightening deadlines.
Conveyancers Struggling with Volume and Deadlines
Current subdued demand, the aftermath of the COVID-19 pandemic and Government initiatives to boost the housing market have strained conveyancing law firms, leading to downsizing and reduced capacity, a gap that will take time to bridge in the event of a demand surge. One of the primary reasons remortgages often take a long time is the administrative burden of the legal process. This includes the need to hold and process funds and the number of requisitions at the Land Registry. This administrative friction has left conveyancing lawyers overwhelmed, struggling to provide the efficient service that homeowners need and deserve.
Demand Bubble and Industry Readiness
Taking these factors together, we think we are starting to see the signs of a demand bubble forming, as remortgaging is delayed, building up future demand. This is coupled with conveyancing supply being constrained due to depressed levels of demand, following a tough few years, could spell trouble. If this demand bubble does burst, and we see significant numbers of borrowers look to remortgage as UK Finance was forecasting in late 2022, would the industry be able to cope?
Technology as a Solution
Can technology alleviate some of these challenges and ensure that the conveyancing law industry can handle the volatility in the market? Many believe that it can, including all of us here at PEXA. By automating time-consuming tasks like payment processing and lodgement, technology can free up lawyers to focus on the legal aspects of the transaction.
PEXA’s Unique Offering
What sets PEXA apart is our bespoke payment scheme (PEXA Pay) designed specifically for property transactions in the UK. PEXA Pay exchanges funds for title, handling the movement of money between lenders at central bank level via the Bank of England. Our mission is to enable same-day remortgages in the UK, a goal we’ve successfully achieved in Australia over the past decade.
PEXA’s proposition goes beyond payment flows. The platform also streamlines conveyancers’ legal workloads through automation and integration with HMLR; it represents a transformation in the administrative paradigm. By standardising processes and reducing friction, PEXA aims to assist the industry in managing higher volumes more efficiently, ensuring that clients are not left on high mortgage rates for longer than necessary.
For mortgage brokers, PEXA’s solution offers a new horizon of opportunities. With a focus on efficiency and transparency, it enables you to serve your clients more effectively through PEXA-enabled lenders. It allows you to meet the challenges with confidence when the remortgage market rebounds, providing your clients with a streamlined, consumer-centric experience.
PEXA’s commitment to revolutionising the remortgage process is unwavering. The acquisition of Optima Legal, designed to enhance charge registration and fund disbursement for remortgages, demonstrates our dedication to making a difference. Additionally, PEXA plans to introduce sale and purchase functionality for chain synchronisation in late 2024, a potential landmark moment for how property is transacted in the UK.
The call to action is clear: It’s not just about weathering the storm of depressed and surging remortgage demands; it’s about creating a solution that can transform the remortgage experience, making it more efficient, transparent, and consumer-centric. PEXA’s technology-enabled approach could be the key to meeting the growing demands of the remortgage market and improving the experience for all involved.
This article was submitted to be published by PEXA as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
