John Charcol COVID-19 Video Guide Summary: Mortgage and Valuations Update
Written on 1 May 2020 by
Product Technical Manager Nick Morrey talks about the impact of COVID-19 on mortgage valuations and what actions lenders are taking to combat this.
What Has Happened to the Mortgage Market over the Last Couple of Weeks?
- Michael Gove made a comment that a lot of the media have speculated as him saying: “let’s shut down the property market”
- Lockdown has both led to the property market slowing down and has meant that lenders have been unable to arrange for valuers to actually visit properties and value them
- Lenders have been working on solutions to this valuations issue
What Did Lenders Actually Do?
- There was a lot of attention over the fact lenders withdrew a lot of products whilst they were thinking about how to combat this valuations issue
- They did this because mortgages over 75% LTV (loan-to-value) require physical inspections which valuers can’t carry out due to lockdown, therefore they have withdrawn those products so people can’t continue applying for those specific products with that lender
What Did Lenders Do to Try and Help Everybody Out?
- If you can’t get a valuer to go out and value a property the first thing to do it is to think about whether or not you can offer those products in the first place
- A lot of lenders temporarily withdrew their products with 80%, 85%, 90% and 95% LTV so that they didn’t give false hope to people looking for products with these LTVs
- Then they started to look at what other systems they could use for valuations
- Out there already were already a mixture of AVMs (automated valuation models) and desktop valuations
- In some instances you can also do a drive-by valuation
- There are various lenders out there who can now do desktop or computerised valuations at up to about 80% or 85%
- There is even one lender looking to do up to 90%
- Whether the lender can do a desktop or computerised valuation will depend on property type and the history and the amount of information the systems have on the property in question
- Lenders are trying to do as many of these computerised valuations as possible, which is why you can still get products to 70%, 75%, 80%, 85% and 90%
- Although you can get lenders to take applications at 95%, we don’t know of any lenders that are doing desktop or computerised valuations at 95%
Which Lenders Are Doing Non-Physical Valuations?
- There are 30 lenders that will do desktop valuations up to 60% LTV for purchases
- There are 33 lenders that will do desktop valuations for remortgages – this includes nearly all the big names and best products
- It’s easier for applicants who want LTVs at up to 60% right now than a lot of people think
- There are 18 lenders that will do desktop valuations at 75% for purchases
- There are 20 lenders that will do desktop valuations at 75% for remortgages – this includes some very big names and some of the best rates
- There are 4 lenders that will do desktop valuations at 85% LTV for purchases
- There are 5 lenders that will do desktop valuations at 85% LTV for remortgages
- There’s one lender that will do desktop valuations at 90% for purchases and remortgages
- We don’t know of any lenders with the risk profile that can take on desktop valuations in place of internal inspections at 95% LTV
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