REVIEW
MARKET
Eye on conveyancing Craig Calder director of mortgages, Barclays
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s an industry we’re accustomed to absorbing challenging conditions, adapting accordingly and staying focused on ensuring business continues without disruption. Swings are always evident following a period of unprecedented circumstances. For lenders, this demonstrates how robust we have to be in our ability to service any peaks or lulls as best we possibly can, and this is also the case for a range of service providers across the housing and mortgage market. CONVEYANCING
One of the hardest-hit areas of the mortgage journey during the extreme transactional highs experienced over much of 2020, 2021, and even 2022 was the conveyancing sector, a fact that was recently highlighted in data from Search Acumen. This found that with COVID-19 pandemic restrictions lifted and the industry scrambling to process a backlog of transactions, high registration volumes during Q1 2022 contributed to a total of 1.26m completed transactions that were processed by the Land Registry during the 2021– 22 financial year. This annual total was reported to be up 87 per cent on the previous financial year, when just 675,377 transactions were recorded. It also represented a 34 per cent increase compared with the 2019–20 financial year, before the pandemic first took hold. The analysis also showed that the rush of activity brought more firms back into the conveyancing market. An average of 4,058 firms were reported to be active each www.mortgageintroducer.com
quarter during 2021–22, up from 3,483 during 2020–21. However, growing case volumes still left the average firm handing 60 per cent more transactions than a year earlier, and 32 per cent more than in 2019– 20, to register their busiest financial year since records began. These are some eyewatering statistics that help demonstrate the pressure that was placed on the conveyancing sector during this period. Firms of all sizes have had the challenge of managing recordbreaking activity levels, and the most digitally enabled firms have emerged as the ones that remain best placed to manage client needs effectively and keep workplace pressures in check. HOMEMOVERS AND FTBS
The aforementioned case backlog ensured that activity levels remained relatively high in the conveyancing sector throughout Q1 2022, but this was also tempered by an expected lull in new-purchase business following the closing of the stamp duty holiday and some standard seasonal influences. This was evident in figures released by UK Finance, which showed that the number of people moving house dropped 42 per cent compared to the first quarter of 2021, with the number of first-time buyers (FTB) down by 12 per cent. Although there was a decrease in homemovers and first-time buyers compared to the unprecedented highs of last year, numbers remained slightly above 2019 pre-pandemic levels as COVID’s ongoing effect continues to drive demand for more space. The research also included fresh analysis around the potential impact of the cost-of-living challenge facing households in 2022. It found that the average mortgaged household will see a three per cent reduction in the amount of disposable income left over after mortgage, credit commitments, and living costs are met. However,
the cost-of-living squeeze is suggested to be felt most acutely in lower-income brackets, which have around half the spare income of those in higher brackets, even before costof-living pressures are factored in. The trade body added that whilst it expects mortgage activity to be strong through this year, this will largely be driven by customers coming to the end of their fixed-rate deals and looking to switch to a better rate. This contrasts with previous years, when a significant element of remortgaging activity involved borrowing substantial sums of additional money, in many cases to fund further property purchases. MORTGAGE BORROWING
Moving into Q2, the latest money and credit statistics from the Bank of England showed that net residential mortgage borrowing decreased to £4.1bn in April, down 36 per cent from £6.4bn in March. Mortgage approvals for house purchases also decreased to 66,000 in April from 69,500 in March, with both measures slightly below their 12-month pre-pandemic averages up to February 2020. Approvals for remortgaging with a different lender decreased to 47,800 in April. In contrast, gross lending rose slightly to £26.5bn in April from £26.2bn in March, while gross repayments increased to £21.5bn in April from £20.0bn in March. It’s clear that additional pressures are currently being placed on an array of household finances, and this will affect purchase activity for FTBs and second steppers. However, we are operating in a marketplace that is still low on stock, meaning property prices are likely to remain robust across the UK and a competitive lending environment will continue to generate some attractive mortgage rates for those borrowers who are in a strong enough financial position to take advantage of them. M I JULY 2022 MORTGAGE INTRODUCER
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