As was revealed in Mortgage Introducer last week, the industry is expecting the first lenders to wheel out AVMs by the end of the year.
However, lenders have been warned the introduction of AVMs must be accompanied by a review of valuation fees to reflect the work being done by the lender.
Ray Boulger, senior technical manager at John Charcol, said: “I don’t know whether lenders are going to charge the same for valuations or even more. For me, they should be reduced as the work for an AVM is probably worth around £50. Different lenders will have different approaches to the issue but we need a fair one.”
The launch of AVMs is widely anticipated by the industry, saving huge amounts of time for both lenders and brokers and ultimately getting the client a faster offer.
While Boulger believed a reduction of valuation fees was necessary, he wasn’t expecting it to happen until market forces take effect.
Boulger commented: “At the beginning, there may not be any reduction because of a lack of competition and the lenders will see it as a bit of extra profit for providing a good service to brokers.”
Mehrdad Yousefi, head of intermediary mortgages at Alliance and Leicester, believed much would depend on the introduction of Home Information Packs (HIPs). He said:
“The Council of Mortgage Lenders (CML) has already said 40 per cent of valuations will be done by AVMs in the next two to three years and if AVMs are in widespread use, both for remortgaging and purchase business and in conjunction with the Home Condition Report (HCR), there is every prospect that by 2009 the cost of valuation will come down.
“However, the HCR needs to be found to meet the criteria of mortgage lenders and intermediaries so both need to work together to make sure this can happen.”
