Lenders have been accused of destabilising the mortgage market by under-valuing properties and not turning valuations around quickly enough.
Peter Sowerby, managing partner of intermediary Coulson Sowerby, said: “We have been 98.9% accurate to surveyors’ valuations for just under two years, covering almost 300 transactions in a vibrant inflating property market. In the last quarter we have suddenly encountered an inexplicable average 14% differential.”
Sowerby continued: “My concern is that if mortgage lenders are now advising surveyors to cut valuations across London and other regions, we will see a gradual repositioning of values at lower levels.”
The problem is not restricted to London, and Nasim Malik, founder of Glasgow Financial Services, said that in his experience: “They [the lenders] will instruct the surveyors to do as tight a survey as possible basically to safeguard their interest for the future and bring the risk as low as possible.”
Malik said the problem was highlighted by the different processes in Scotland where, for house purchases, the intermediary is responsible for appointing the surveyor. In these cases Malik said there is never a problem, but when it comes to remortgages, lenders such as HBOS insist on appointing their own surveyors. Twice in recent weeks he said valuations had come back from the lender for remortgages which were around 15% lower than the valuations he had obtained independently.
Malik said: “It makes us look totally stupid in front of our customers, it will delay the process and the client will possibly lose the deal and we will lose the deal.”
Paul Fincham, spokesman for HBOS denied it took any deliberate action in this way: “We do not set out to dictate any type of policy and the valuers that we use are experts in their own field.”
Bill Dudgeon, managing director of HBOS subsidiary The Mortgage Business (TMB), admitted there were occasionally discrepancies between a client’s expectations and a valuer’s report, but said he was unaware of any large scale problem. He said: “Lenders are here to lend and it is in our interests to get an independent valuation done.” He added that it would be working against lenders’ interests to undervalue properties as they have lending targets to hit.