Andrew Lloyd
Chief customer officer
PEXA UK
The ebb and flow of demand in the mortgage market has been anything but typical in recent times. Government support, interest-only repayments and the stamp duty moratorium have all contributed to a surge in remortgage demands.
Many homeowners on low two-year fixed mortgage rates are now facing the prospect of refixing at around 6%.
While some economic indicators suggest falling interest rates in the medium-to-long term, those who are forced to lock into high rates will no doubt consider their options carefully when they do, balancing early repayment charges against the risk of paying more than they need to.
It’s not just homeowners who are affected. Variations in the demand for remortgages make forecasting resource and capacity in the conveyancing sector very difficult.
Our immediate goal is to enable same-day remortgages. It represents a significant shift in the potential customer experience
Tight profit margins in the sector mean that carrying higher overheads in readiness for volume in periods of low demand is a direct hit to the bottom line of conveyancing lawyers, and so many firms’ response in reducing capacity is unsurprising.
This is worrying due to recent history. The Covid-19 pandemic, coupled with government initiatives to stimulate the housing market (such as the stamp duty holiday), placed substantial strain on the sector, resulting in many lawyers already leaving the field and the downsizing of teams.
Administrative burden
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 conveyancers overwhelmed, struggling to provide the efficient service that homeowners need and deserve.
It’s about creating a solution that can transform the remortgage experience, making it more efficient, transparent and consumer-centric
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 law supply being constrained due to depressed levels of existing demand, following a tough few years.
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?
Can technology alleviate some of these challenges and ensure that the conveyancing industry can handle the volatility in the market? Many believe that it can, including all of us here at PEXA.
PEXA aims to expedite transactions and efficiently manage high volumes, preventing homeowners from being held to ransom
By automating time-consuming tasks like payment processing and lodgement, technology can free up lawyers to focus on the legal aspects of the transaction.
Furthermore, increased transparency in the process benefits the Consumer Duty, ensuring that homeowners are fully informed about their options and obligations.
PEXA Pay
PEXA has developed a bespoke payment scheme (PEXA Pay) specifically designed for transacting property in the UK.
The goal is to enable same-day remortgages, and this isn’t just a pipe dream – it’s a proven model that PEXA has successfully implemented in Australia for more than a decade, with over 90% of all property transactions Down Under passing through PEXA’s infrastructure.
PEXA’s proposition goes beyond merely easing legal workloads; it represents a shift in the administrative paradigm.
By automating time-consuming tasks like payment processing and lodgement, technology can free up lawyers to focus on the legal aspects of the transaction
By streamlining and standardising processes, PEXA aims to expedite transactions and efficiently manage high volumes, preventing homeowners from being held to ransom on high rates for longer than necessary and providing more capacity to the conveyancing law sector.
PEXA’s commitment to revolutionising the remortgage process is evident through the acquisition of Optima Legal as a route to market to be able to demonstrate the strength of the PEXA proposition. It is on course to introduce sale and purchase functionality for chain synchronisation in late 2024 and has recently launched limited company support for buy-to-let remortgages, as well as enhanced title validation and title change-of-name functionality within the platform to broaden the scope of transactions that it can facilitate and further reduce the administrative burden to law firms.
The ebb and flow of demand in the mortgage market has been anything but typical in recent times
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.
