30 Oct 2017

By Mark Blackwell, lending and surveying services director at eTech Solutions

This article was published in Mortgage Introducer, Oct 2017, pg 48


Conflicting reports about the current state of the UK property market paint a picture of uncertainty for stakeholders, with different industry commentators simultaneously reporting on resilience and reduced confidence.


On the less positive front, a recent Bank of England report notes that down-valuations are causing more property transactions to collapse. The BoE 2017 Q3 report is based on 12 regional agents’ combined summary of business conditions, following discussion with 700 businesses across the UK. In the report, the BoE noted that the increased numbers of transactions falling through reflect concerns about prices dropping.


Conversely, and on a more positive note, the Royal Institute of Chartered Surveyors’ UK Residential Market Survey for August paints a more resilient (if varied) picture, with headline prices up 6% over the month, compared to a 1 % increase previously. Regionally the picture remains very mixed, with marked differences between London and the South East where concerns about a fall in prices are more acute, compared with the other regions where optimism is more widespread.


For the mortgage intermediary, these conflicting reports describe a market that’s neither buoyant nor in decline and for many, uncertainty is the prevailing resulting sentiment. With down-valuations increasingly placing pressure on the mortgage process, brokers are expecting surveyors to have the best tools to ensure optimal property values are obtained,reducing instances of broken property chains.


Down-valuations typically occur where an agent applies a potentially over-optimistic value to a property either in order to secure an instruction or in response to sellers insisting on higher valuations due to a possible lack of understanding. At the point where the lender enters the process, their surveyor subsequently applies ostensibly a lower valuation, resulting in reduced loan amounts being offered, and less preferential loan to value ratios available. This can have especially dire consequences for those with small deposits, with first time buyers typically being particularly hard-hit. More pressure is placed on the entire process, adversely affecting buyer confidence and ultimately reducing sale values. Having the right tools in place to ensure the most accurate property values are obtained at each stage of the mortgage journey is more important than ever, and increasingly, stakeholders are turning to technology providers for more precise methods of analysis and consequently more defensible valuations.


It’s important to remember though, that the mortgage market is a people business, and on an individual basis each mortgage represents an intimate transaction requiring a human touch.


Technology has a vital role to play, but technology, data and people need to coexist, and stakeholders across the industry have a role to play in ensuring this happens.


Automated Valuation Models are a case in point. In recent times, the increasing use of AVMs has provided considerable benefits in terms of efficiency value ratios but with down valuations often increasing LTV ratios beyond acceptable policy and product thresholds, this safety net will be less frequently available.


Technology solutions can help to mitigate against this uncertainty and enable surveyors to achieve more accurate valuations. Streamlined workflows and increased efficiency savings through optimisation and scheduling of jobs, together with increased access to more robust comparable data all free up the surveyor’s time to concentrate on the elements of the job for which he or she is inherently skilled. Access to better data ultimately means better decisions are made, making life easier for intermediaries who can have increased confidence in the whole process.


This is not dissimilar to another area where careful coexistence between technology and people needs to be maintained; algorithm-based online mortgage advice. This is an area we keep a keen eye on; we hear and read about the increasing emergence of robot advice, which challenges removing the human element from the sales process. This kind of advice certainly has a role to play, especially where efficiency savings mean quicker transactions and happier customers, but where it comes at the expense of robust decisions and accurate information, this area certainly needs to evolve. Throughout the survey process, not all cases are straightforward and obvious, and in such instances a human touch is often needed to provide empathetic advice and reassurance. Brokers, lenders and technology providers alike want to see positive change and it’s increasingly important to maintain a personal touch in what for many customers is the biggest financial decision they’ll ever make.


In an uncertain market, customers look to industry experts for sound advice, robust valuations and ultimately a guiding hand to provide reassurance as they navigate the often complicated and stressful processes involved in a house sale or remortgage. Maintaining the correct balance between technology and people is more important than ever.

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