28/8/09 - Houses are being undervalued by mortgage lenders causing sales and re-mortgages to fall through according to research by the National Association of Estate Agents. Discrepancies between agreed sale prices and valuations are having a detrimental effect on the number of property transactions, says the association.
These revelations are perhaps not entirely unexpected as many of the large lenders either own their own valuation companies or employ in-house valuers. They insist on using their own valuers to assess a property for mortgage purposes receiving revenue for both mortgage and valuation! Those who take a cynical view might say that this allows those large lenders to have an element of control over house prices and this now appears to be a cause of concern for the NAEA. Does it also raise the spectre of conflict of interest and good governance?
Additionally, some surveyors appear to be predicting that house prices will rise over the next three months, partly due to the current lack of supply on the housing market. RICS (Royal Institute of Chartered Surveyors) indicates that the number of properties left on estate agents’ books remains low, despite a rise in the number of new instructions for the first time since May 2007. However, they also warn that if the availability of mortgages remains constrained there is a risk that prices will fall again as the potential dual prongs of rising mortgage rates and unemployment take hold.
The Council of Mortgage Lenders points towards signs of stabilisation in the mortgage market but says that lending levels remain weak. House purchase loans accounted for £5.9bn in lending, up 23% from 36,500 in May to 45,000 in June. The CML points out, however, that this is less than half the average number of loans recorded in June over the last seven years.
That said, there are still some good deals out there so if you decide to review your own mortgage position over the weekend please do call us! Have a great Bank Holiday weekend!
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