The value of mortgages approved but not taken up reached a record £8.7 billion in the first quarter of 2026, according to analysis of Bank of England data by Novus Strategy.
Mortgage cancellations rose 6.1% year-on-year to 35,144 in the first three months of the year, despite a 2.7% fall in mortgage approvals in the final quarter of 2025 compared with the same period a year earlier.
The value of cancellations between January and March was 12.3% higher than the £7.7 billion recorded in the first quarter of 2025.
Novus Strategy, a ‘transformation consultancy’ for the home buying and selling industry, said the figures represented a warning to lenders because each cancelled mortgage carries unrecovered processing, valuation and underwriting costs.
It said lenders must also hold sufficient capital and liquidity against outstanding mortgage offers until they either complete or are cancelled, meaning £8.7 billion of approved lending was committed to loans that were ultimately not advanced.
The consultancy said longer completion times were compounding the issue by increasing exposure to changes in borrower circumstances, chain collapses and rate movements.
According to TwentyCi data cited by Novus Strategy, the time between sold subject to contract and exchange reached 134 days in the first quarter, while 67,489 transactions fell through post-offer, down 12.1% annually.
Novus Strategy said mortgage cancellations could be caused by a range of factors, including borrowers holding more than one offer, switching to another deal, or withdrawing from a purchase altogether. It also pointed to rate volatility linked to the Iran crisis as a possible contributory factor this year.
The firm said reducing the time to completion was increasingly becoming a focus for lenders, alongside conveyancers and estate agents, because it had greater potential to improve margins and reduce costs than simply cutting time to offer.
It said digital transformation across the home buying process would be central to addressing the issue, with interoperability between organisations becoming more important than internal digitisation alone.
Novus Strategy said Smart Data, trust frameworks, upfront property information, digital ID and open data standards were all helping to support this shift. It described Horizontal Digital Integration as an operating model designed to allow evidence, data and decisions to move more predictably across the whole transaction journey.
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.”
