AVMs are expected to become a major part of the mortgage market over the next few years, with the Council of Mortgage Lenders (CML) predicting 40 per cent of valuations will be done this way by 2012.
Ray Boulger, senior technical manager at John Charcol, said: “There will be two or three lenders who will be offering automated valuations later this year. There will be no AVMs on buy-to-let but they will be available on other mainstream products and non-conforming lending.”
He argued the advent of AVMs would bring changes which lenders would need time to adapt to, but that the service offering would push lenders to compete and those that didn’t would be left behind.
“Lenders will need to see a significant number of valuations where they can compare the two and see a degree of correlation which makes them comfortable with the proposition.
“However, once a couple have gone down this route, others will be pressured to follow them because for a broker to sit with a client and offer them a prospective mortgage offer at the end, it is a big service win.”
Boulger added that the loan-to-value (LTV) ratio would determine how confident mortgage lenders were with AVMs.
Linda Will, managing director at Accord Mortgages, agreed with the views. She said: “There are one or two things that are stopping instant offers right now, for example, high LTV mortgages and the worries over automated decision making. However, I believe low LTV offers will go straight through.”
