The rise of secured loans has not been without its unanticipated consequences and the latest issue centres round the time taken to get valuations done, Bradley Moore, director of Brightstar Financial says.
Of course, it is not just a problem for the second charge market, as the first charge mortgage market is also suffering. It is easy to become frustrated as an intermediary, but it will take time for the supply chain to become fully functioning again after the past five years of cutbacks.
One of the least talked about sectors in terms of the credit crunch was that of surveyors. It would be fair to say that their numbers have taken just as much of a hammering as that of advisers as a consequence of the time when mortgage applications fell off the cliff in 2008/9.
In 2007, there were approximately 7000 valuers working at the height of the boom, while today the number is probably shy of 2000. Of course, having waited so long for a recovery, it is distressing to discover that the mechanisms are not in place to cope with the upturn of business.
It is going to take a while to train a new generation of surveyors or to persuade those that left the profession to return.
While it tends not to make many headlines, recruitment of valuers who have ‘retired’, will not have been helped by the pursuit by some lenders of surveying firms, which it accuses of overvaluing during the boom years.
One alternative, which is being championed by a number of lenders in the secured loan sector, is the Automated Valuation Model or AVM. Prestige Finance and Shawbrook Bank have been particularly active in recognising the difficulties surrounding valuation and have begun to adopt and then improve access to this facility that calculates property valuations using a statistical model that computes large amounts of property data to generate an estimate of the market value for an individual property.
AVM’s are definitely working as a means of speeding up the process and more lenders in our sector could do well to look to do the same. Of course, as more loans go into the higher LTV brackets, it is unlikely that lenders will want to venture too far in the AVM direction without being sure of their security, but it is refreshing to see the lending community prepared to do a little lateral thinking to help improve the situation.