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Although it’s only been 12 months since my last blog for UK Finance, it feels like much longer ago looking back on it now. The pandemic felt far more front-of-mind and the housing market was in a completely different place.
Back when we were in the lead up to the Stamp Duty holiday deadline, both customers and industry were facing a whole different range of obstacles.
Interest rates were still rock bottom, and the cost-of-living crisis wasn’t even a speck on the horizon. Those looking to move home in the summer of last year were in a race to complete before 30 September. If they didn’t, they would face having to find potentially thousands of pounds extra to cover additional tax costs. Anyone working at a mortgage lending, broking or conveyancing firm was likely working around the clock to help them get there. I think we can comfortably say now, months on, that it was a frantic period.
However, many of the processes that challenged the market in the face of heightened demand are still present. As interest rates rise, amid rocketing inflation, there is greater incentive to shop around for the cheapest remortgage deal. This will put continued pressure on conveyancers and lenders alike.
We believe there is a golden opportunity to improve consumer outcomes, positively changing the market in a way that makes it more resilient and generally better for customers and industry.
To do so, collectively we need to transform the remortgage and completion journey. We need a system that is more fit for purpose and that leverages technology, with the ultimate benefit of drastically reducing settlement times and making the experience more seamless for all parties involved. The importance of achieving this is made clear by the ongoing cost-of-living crisis and the need to empower borrowers to remortgage onto the best rates as quickly as possible.
From our conversations with customers and businesses it’s clear that this innovation is long overdue. However, progress is taking place. Working with the Bank of England and the lending industry, we have developed an entirely new and centralised payments system. When transactions begin in September, it will be just the seventh active net settlement payment scheme to clear through the Bank. This will underpin a much faster way for remortgages to complete.
We envisage a healthier and more resilient market and wish to effectively create a new digital pathway that’s altogether more fit-for-purpose, helping lenders handle greater demand. Remortgaging is just the start. Such significant change won’t happen overnight and requires a collaborative approach across industry to iron out many of the issues in current processes associated with property settlements in the UK. As we work to create real positive change, and embed new technology into the market, we want to hear from you.
James Bawa, UK Chief Executive Officer, PEXA