Valuations is the big question. Lots of lenders have been innovating in the last few weeks to try and navigate this hurdle. AVMs & Desktop Valuations have been widely introduced to try and accurately value properties for mortgage purposes.
Furlough & Mortgages
With so many employees being put on furlough mortgage lenders have been updated their criteria and factor this into their affordability calculations. The fact that lenders are still considering applications from furloughed employees is good news, however most lenders are now using the furloughed pay amount at 80% of your normal salary, even if it is being topped up by your employer.
Mortgage Product Availability Drops
The amount of mortgage products available in April (although still in excess of 10,000) was significantly lower than the running average before. Products are beginning to become available again but this will take time to get back to the previous ‘normal’ levels.
What are AVM’s?
AVMs are Automated Valuation Models, computer programs designed to value properties. They use historic sales data in order to calculate an estimate for the value of the property in question. It is as a result of AVM’s that more lenders have been able to increase the loan to values available and indeed start to lend at all.
Lot’s of lenders are now offering up to 85% loan to value with a few offering 90%, this new technology is helping the mortgage market recover sooner.
What does this all really mean?
There are lots of positives to take from the way lenders are reacting to the changes in the world. The way the lenders have adapted, and how quickly, to the changing world has been excellent, many completely changing their processes to boot. It will undoubtedly contribute to a smoother process going forward, leading to both faster processing and potentially increased capacity.
It seems likely that lenders will be looking to reintroduce higher loan to value products when they feel ready. Hopefully this will be sooner rather than later and give clients more options.