Revolution in action – the changes in the mortgage market that will extend beyond lockdown
The mortgage market has been changing at an extraordinary rate over the last few weeks and we have seen a major fundamental change that we believe will extend beyond the end of lockdown.
That change is the valuation process, with valuers now using desktop valuations more often (i.e. undertaking research to value properties without physically visiting them). The Coronavirus crisis has demonstrated that these virtual valuations are viable and that they can be undertaken at scale. Some mainstream lenders are prepared to lend at 90% loan-to-value (LTV) via desktop valuations now.
The adoption of desktop valuations will only become more widespread and now some buy-to-let lenders that were previously slower to respond are also on-board. Where data is available online valuations will be used in all but the most complex circumstances, but we will believe that this will eventually extend to HMOs and multi-unit blocks too.
This is now the new normal and will ultimately benefit borrowers, speeding up the mortgage application process and saving time, but also saving money, too. Moreover, this method ultimately is greener and more sustainable, reducing the need for valuers to make journeys by car in all but the most complex cases.
From the lender’s perspective, those that are quick to adapt to this process are reaping the rewards of their agility in terms of more business and we have seen a number of cases recently where mainstream high-street lenders have lost out to one of their competitors.
This links to the fact that offer times are now outperforming pre-Coronavirus levels, and in some cases that time frame has been slashed. In fact, several of our clients in the last couple of weeks have received offers within 2-3 days (not a typo). For example, one client’s mortgage was declined direct with their bank for a purchase and they needed to complete extremely quickly. We worked with a lender who had short processing times and could do an online valuation and the offer was ready in two days. This allowed him to complete in under 2 weeks as the legal work was already underway – a quick turnaround even without the added pressures of COVID-19.
We believe that now lenders and valuers have adapted to life under lockdown, we will see processing speeds increased going forward for all mortgage types and this bodes well for the recovery of the housing market going forward.