"This is one of the most-watched metrics inside banks and building societies, and these industry-wide figures illustrate the scale of the problem but also the opportunity"
- Claire Van der Zant - Novus Strategy
The value of mortgages not taken up by home buyers reached a record £8.7bn in Q1 2026, up 12.3% from £7.7bn in the same period last year, according to Bank of England data analysed by Novus Strategy, a transformation consultancy for the home buying and selling industry.
Mortgage cancellations rose 6.1% to 35,144 in the first quarter, even as the number of mortgage approvals fell 2.7% in Q4 2025 compared with the prior year. The divergence underlines a growing problem for lenders: more of the loans they process and approve are never advanced.
The financial consequences extend well beyond lost revenue. Every cancellation incurs processing, valuation and underwriting costs that regularly run into thousands of pounds per case, none of which is recoverable. Beyond that, lenders must maintain sufficient capital and liquidity against every outstanding mortgage offer until it either completes or is cancelled. With £8.7bn of approvals sitting undrawn in a single quarter, the volume of capital committed to loans that will never be advanced is substantial.
Long completion times compound the problem. The gap between sale agreed and exchange reached 134 days in Q1, during which 67,489 transactions fell through post-offer, down 12.1% annually but still a significant drag. For lenders, every additional week in the pipeline means more capital tied up, underwriting assumptions ageing and cancellation risk accumulating.
Market volatility adds another layer of difficulty. The interest rate spike triggered by the Iran crisis this year has been a contributing factor, with borrowers switching to lower rates, holding multiple offers simultaneously or pulling out of sales altogether. Chain collapses driven by excessive completion times also cause offers to expire before they can be drawn down.
Claire Van der Zant, chief executive of Novus Strategy, said: "The sheer weight of cancellations continues to inflict a lot of pain on lenders."
"This is one of the most-watched metrics inside banks and building societies, and these industry-wide figures illustrate the scale of the problem but also the opportunity. Reducing the volume and value of cancellations is one of the easiest ways lenders can boost their bottom line over the next decade, but the solution is not an inward-facing one.
"A revolution is unfolding in homebuying, but it's one that requires everyone involved to take an ecosystem view, not least because the homebuying journey is being redesigned. It's no longer about internal digitisation, it's about wider transformation delivered by integrating horizontally for interoperability. We've got to bring speed-to-completion down and allow everyone, including businesses, to share in the benefits of a more efficient property market."
The path forward, Novus Strategy argues, lies in digital transformation across the industry rather than within individual firms. Innovations, including Smart Data, trust frameworks, upfront property information, digital ID and open data standards, are accelerating progress.
