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The need for speed

Speed is of the essence when you are working in an industry where the average house purchase takes 12 weeks. Admittedly, much of this is down to the grindingly slow legal system, but ensuring that a mortgage offer is achieved as quickly as possible helps speed things up.

The Government put its faith in Hips. But while the home condition report (HCR) has been quietly dropped and the industry wonders whether Hips will ever materialise, a quieter, more effective revolution has been going on elsewhere. With automated valuation models, it can now take minutes, not weeks, to get a mortgage offer. Such point- of-sale technology means physical valuations could become a thing of the past.

Just weeks after GMAC-RFC became the first lender to offer an AVM, closely followed by edeus, they are already hugely significant. For intermediaries, they are a no-brainer, particularly when it comes to remortgaging. With rising arrangement fees, it is difficult to persuade a client who wants to remortgage to spend hundreds of pounds on yet another valuation of a property they already own. AVMs will make remortgaging cheaper by reducing such fees.

But while clients and brokers will welcome this development, surveyors may be less enamoured. AVMs won’t replace the human element in underwriting completely, so they won’t be entirely redundant, but big lenders, with their own surveying arms, may be wondering if AVMs will spell the end of this lucrative business.

Lenders could simply ignore AVMs. The problem with this is that when consumers cotton on to point-of-sale technology, will big lenders such as HBOS be able to resist?

All is not lost for these lenders. While AVMs are set to become massively important they are limited to low LTVs for now. But LTVs will climb once there is access to more data.

And AVMs are unlikely to be the end of it. If you can have an AVM, why use this technology elsewhere – for searches, Hips, identification checking, conveyancing and contact exchange and completion? At some point, the whole process may move online.

Whether the 10-12 weeks that it takes to buy and move into your new home will be reduced to a week or two remains to be seen. But it should get much quicker, ultimately benefiting even those lenders whose surveying arms end up losing some business.

Mark Harris is managing director at Savills Private Finance

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