AVM’s are computer-aided valuations that are being used or considered for use in place of traditional surveyor valuations for the purposes of lending decisions by lenders originating over
80% of the mortgages in the United Kingdom.
AVM’s are a recognised feature of the North American lender marketplace with virtually all mortgage refinancing decisions made based on AVM system output.
While Standard & Poor’s guidelines cover the £18bn UK securitised RMBS market, they also provide clarity to the credit risk departments of the UK Mortgage industry who are utilising the models for everything from marketing to existing clients, to instant valuations for mortgage origination to auditing and revaluing entire mortgage portfolios.
Hometrack believes that over 90% of ALL property valuations can be covered with little or no “haircut” (Reduction in value credited by the Agencies for securitisation).
AVM’s will help revolutionise the mortgage industry in the United Kingdom in the next few years with the main benefit being the “Holy Grail” of instant valuations. With the Council of Mortgage
Lenders stating that Home Condition Reports can be converted to valuations using low cost AVM methodology, this report clearly brings this a step closer. In recognition of this, the CML has itself
distributed this report to its members.
This report is significant because it acknowledges that the use of AVM’s is becoming routine as lenders seek to speed up their approvals process and reduce costs. Hometrack is the only
provider of this technology to have developed its AVM, the Realtime Valuation Systemä entirely for the United Kingdom. Realtimeä’s unique business rules and Confidence Levels permit the system to be precisely calibrated to meet the distinctive business parameters of each lender.
Recent tests for a major national lender achieved unparalleled levels of accuracy:
· A “Hit Rate” (coverage) of 100% in England and Wales
· Accuracy: 98.4% are no greater than 10% above a surveyor’s valuation i.e. virtually no
overvaluations as defined by industry standards!
· Realtimeä is the most accurate AVM available today
Hometrack Chief Executive Mark Witherspoon commented “ We have developed this model in the UK over the past four years. This report validates the extension of AVM usage beyond retail
funded lending to securitisation, and accelerates the pace of change in the marketplace.”
