HTB drops max LTV due to valuation uncertainty

HTB told Specialist Lending Solutions that in any situations where there is no material uncertainty clause, the lender is willing to lend at more than 60 per cent LTV.

In a message sent to brokers today, HTB said it needed to have more clarity around the actual performance of property prices post Covid-19 before it could be more confident around material uncertainties from valuers.

It added: “Despite what people are saying, the problem is not how do we get surveyors to inspect properties during the lock down, this is merely an inconvenience.

“The real problem is what number do we put on any valuation in the months following lock down and how confident will we be to lend against that number.”

The lender does not have any automated or desktop valuation processes in place and so all valuations must be conducted in-person.

It clarified that any pipeline cases under offer will proceed as normal, but added that applications yet to receive valuations would be subject to the new criteria.

Those applications which have already received a valuation but not proceeded to offer will be reviewed on a case-by-case basis.

HTB said it was sympathetic to borrowers in this situation, although there were likely to be very few of them given recent valuation activity, and it would do whatever was possible to assist them.

Shortage of comparables

Charles McDowell, managing director, specialist mortgages at HTB (pictured), said the firm would continue to review its position as it is able to build up a base of up-to-date house price data.

“Valuation is as much an art as it is a science, but a key element of any valuation is suitable comparable transactions and the truth is that we won’t have comparable transactions for a number of months in some cases,” he said.

“Our valuation partners are responding to this by including material uncertainty clauses within their reports.

“We in turn as a lender are responding to this material uncertainty by reducing our maximum LTV to 60 per cent. If and when we begin to see valuation reports without these clauses we will lend up to 75 per cent.”