Three quarters of borrowers feel remortgage process unfit for purpose
One in five mortgage borrowers that were looking to remortgage over the past two years abandoned the process due to delays or other frustrations, with overwhelming majority reporting it unfit for purpose.
Customer experience has worsened since the start of the pandemic due to heightened demand, remote working and increased pressure on the conveyancing process, according to a survey of 1,000 UK consumers who remortgaged in the last 24 months by Pexa.
The remortgage market is expected to be very strong this year, as two-year mortgage deals that were taken out when the property market reopened, and five-year fixed rate deals taken out in 2017 near maturity.
It added that 27 per cent of those who abandoned their attempt to remortgage said they missed out on a better mortgage rate, 30 per cent found it stressful, and 23 per cent said it had caused sleep loss.
The survey continued that 47 per cent of recent remortgagors said they would pick the easiest remortgage option next time, and 49 per cent said they would switch to a new mortgage with their existing lender.
Additionally, 28 per cent of those who chose to persevere experienced severe delays, and more than three quarters, 76 per cent, said the remortgage process was not fit for purpose.
A third said that they wanted the process to be faster, 27 per cent said they wanted a more consistent process across lenders, and 36 per cent wanted more transparency through an online portal.
James Bawa, chief executive of Pexa UK, said: “Normally a mortgage is a person’s biggest monthly outgoing and as interest rates rise, this will likely increase. With other bills – like energy and gas – also going up, most will now need to think carefully about how they can shore up their finances.
“Key to this is finding the right mortgage, something that’s best done by considering all the available options. Unfortunately, because so many people have experienced issues with the remortgage process over the last few years, many are being put off from doing this.”
He said that the entire industry is collaborating to improve customer outcomes, but part of the issue is that the remortgage process was “disjointed and still relies on an outdated 150-year-old conveyancing process”, exacerbated by the pandemic.
Bawa added that it aims to bring the speed and simplicity that it introduced in Australia, where Pexa was founded in 2014, to the UK, with plans to launch its platform in the Autumn.
He claims that in Australia, the first country to create a digital process for lodgement and settlement, “people wanting to remortgage could do so in just a day”.
Pexa has helped facilitate 11 million property transactions in Australia through its digital platform. It is now developing a “bespoke solution” for the UK housing market, that will streamline the remortgaging process for lenders, lawyers and conveyancers.