Brokers report a rise in down valuations – The Intermediary

Brokers have reported a rise in down valuations in recent weeks, especially on remortgages, with one lender, Gen H, confirming the trend.

One broker, Laura Bairstow, said: “We have noticed a definite increase in down valuations, especially in instances where the borrower only has a 5% or 10% deposit.”

Another broker, Katy Eatenton, added: “I have found there are more down valuations on remortgages than purchases. Valuers are clearly still pre-empting a crash. That or they are helping one happen.”

Meanwhile, broker Richard Jennings said: “Just this morning I have received a valuation report through showing a 10% reduction in the estimated price.”

Gareth Davies cut straight to the chase: “It’s down valuation central right now. We’re seeing a clear uptick in surveyors disagreeing on valuation figures.

“We’ve had three cases this week where a surveyor has stated a value less than what the property was bought for in 2022, despite no evidence to suggest that this is happening in the respective regions.

“Sadly, you have more chance of knitting fog than getting a surveyor to reconsider a decision.”

Peter Dockar, chief commercial officer at Gen H, said: “From a lender’s perspective, we have also seen a gradual uptick in down valuations.”

Reaction:

Gary Bush, financial adviser at MortgageShop.com:

“We have found both chartered surveyors and UK lenders working on very confusing valuation models at the moment.

“With Halifax and Nationwide both showing positive numbers for property across most of the country in their respective indices, this does not seem to follow through in surveys and on lenders’ automated valuation systems when working on mortgage applications for purchase and remortgage cases.

“There is usually a lag in data being updated on any positive news but we are well beyond the benchmark timescale now for updates to have been implemented.

“Caution is good in financial services, but paranoia is unnecessary.”

Gareth Davies, director at South Coast Mortgage Services:

“It’s down valuation central right now. We’re seeing a clear uptick in surveyors disagreeing on valuation figures.

“We’ve had three cases this week where a surveyor has stated a value less than what the property was bought for in 2022, despite no evidence to suggest that this is happening in the respective regions.

“One client was furious with the attitude of the surveyor that came out to his house, as he apparently seemed ‘hell-bent’ on disagreeing with the estimated value from the second he entered the door.

“He even said that the place was on the ‘lower end of the scale’, despite being a beautiful detached 4-bed place.

“As ever, though, what the surveyor says goes, and most lenders aren’t interested in an appeal and most advisers will agree it’s usually pointless.

“Sadly, you have more chance of knitting fog than getting a surveyor to reconsider a decision.”

Laura Bairstow, founder at The Mortgage Masters:

“We have noticed a definite increase in down valuations, especially in instances where the borrower only has a 5% or 10% deposit.

“Interestingly, we had a case this week where both the borrower and the estate agent were shocked at the extent of the down valuation so the borrower opted to have an independent valuation of the property and it came in at the asking price, way above what the lender had valued it at.”

Peter Dockar, chief commercial officer at Gen H:

“From a lender’s perspective, we have also seen a gradual uptick in down valuations.

“This is likely the result of a few converging factors. The market could be considered by some to be overheated.

“With limited available stock in the market, the occasional bidding war, and estate agents attempting to net the greatest purchase price, this trend in down valuations suggests that valuers are seeing through the frenzy.

“These slight corrections are probably necessary, but they do put pressure on buyers to come up with extra cash or negotiate a lower purchase price.”

Katy Eatenton, mortgage & protection specialist at Lifetime Wealth Management:

“I have found there are more down valuations on remortgages than purchases. Valuers are clearly still pre-empting a crash. That or they are helping one happen.”

Mark Robinson, managing director at Albion Forest Mortgages:

“In previous months we’ve seen quite a few down valuations, however more recently we haven’t been seeing anywhere near the same numbers of down valuations.

“It can often seem like we get them all at once though. I actually think the recent lack of down valuations we have been experiencing shows surveyors have a bit more confidence in the market.”

Clive Read, owner at Goldmanread:

“We are starting to see an increase in down valuations, not just for the property itself but also down valuations of rental on buy to lets.

“We had a recent case where a client has a signed AST on an already rented house that was making £2,700 per month.

“For some reason the valuer came in and downgraded the rent to £2,200, and there was no appeal. This can sometimes happen where surveyors are worried about the market and want to cover their backs against any potential future property downturn.

“It can be frustrating for the broker and most importantly the borrower, especially if it means loan-to-value thresholds get increased resulting in higher interest rates and lower potential equity being released.

“Although some lenders offer an appeals process, in reality these are rarely successful.”

Jack Tutton, director at SJ Mortgages:

“Down valuations are a common at the moment, particularly with our remortgage applications.

“We have seen significant differences in valuations, with the largest being over £60,000.

“This is something that we are also seeing when looking at what the customer’s existing lender values their property at via an automated valuation.

“One such example was a client’s home being valued at £10,000 below what they paid for it two years ago.

“We were able to remortgage to another lender that valued the property at over £40,000 more than the automated valuation.”

Graham Cox, founder at Self Employed Mortgage Hub:

“I think it’s happening now because we’re officially in recession and lenders are still nervous that property values could fall this year.

“Buyers and vendors are getting such mixed signals about house prices that many offers are at, or close to asking price again. If the asking price is overvalued, then down valuations happen.”

Elliott Culley, director at Switch Mortgage Finance:

“Down valuations are more common in areas of the country such as London and the South East.

“Currently we are seeing some down valuations, but the majority of borrowers are being savvy and getting good deals when it comes to purchasing a property.

“Down valuations are more prevalent in the remortgage market as some homeowners believe their house to be worth more than the surveyors price it at.”

Richard Jennings CeMAP, founder & managing director at Richard Jennings Mortgage Services commented:

“Down valuations are starting to happen more and more with surveyors and lenders seemingly very wary of house price fluctuations.

“Just this morning I have received a valuation report through showing a 10% reduction in the estimated price.

“Whilst some clients will have unrealistic expectations of their property value, particularly those looking to remortgage and squeeze into a lower banded LTV product range, there are many who have thoroughly researched their properties, including use of our own in-house AVM modelling tool, but the report came back lower regardless.”

Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:

“We have definitely seen an upturn in the number of down valuations over the past few months.

“Primarily this is down to the low number of properties for sale, an upturn in buyers returning to the market and valuers been very cautious based on the last 12 to 18 months.

“We have seen a number of properties recently with multiple offers and therefore agents inviting ‘Best and Final offers’ means that, to secure a property, people feel they have to increase their offer beyond the asking price.

“Interesting times and we expect more down valuations over the coming months unless we have a positive upturn in housing stock or valuers becoming more optimistic, which will not happen.”