Turnaround times between the exchange of contracts and completion have lengthened as the booming demand to move home causes delays right through the homebuying process, said Kevin Roberts, director of Legal & General Mortgage Club.
Speaking to an online audience of mortgage intermediaries at The Mortgage and Protection Event 2020, Roberts said the drawn out exchange to completion turnaround time was a sign that the market as a whole was under strain from the volume of mortgage business.
Brokers have already reported that mortgage offers are taking, in some cases, four weeks longer to obtain than they did pre-pandemic due to high demand and more complex underwriting processes.
Meanwhile delays obtaining local authority searches and a lack of capacity among conveyancers to manage the increasing workloads is slowing down the post-offer part of the transaction.
L&G Mortgage Club noticed the gap between the final two stages of the homebuying process had widened because its overdraft facility for proc fee payments was near to reaching record levels.
L&G allows its advisers to claim their proc fees in advance by requesting payment from the club when contracts exchange, instead of when the sale completes.
L&G honours the request and is reimbursed when the lender releases the proc fee on completion. But the club is now waiting longer for the proc fees to wind up in its coffers.
Roberts said: “It’s great for you guys using the [advance payment facility], you are claiming your proc fee early, but for me it is more of a risk and I watch that metric very carefully as you can imagine.”
Samantha Partington is a freelance trade and consumer journalist writing about property and personal finance. Previously she worked worked for the Daily Mail and Property Week. She is the former deputy editor of Mortgage Solutions and editor of Specialist Lending Solutions.
Before becoming a journalist, Samantha worked as a mortgage broker and latterly for a mortgage, bridging and secured loan lender. Samantha is CeMAP qualified. Follow her on Twitter @SamJPartington1.