Surveyors lower home valuations
By Sharlene Goff
Financial Times
Published: March 21 2008 22:00
Homeowners coming to the end of cheap fixed-rate mortgage deals are having
the valuation of their properties reduced by surveyors, who fear the
housing
slowdown could gather pace.
Some borrowers are being denied new and cheaper mortgage deals after
finding
their properties are worth less than they paid for them two years ago.
More frequently, borrowers are having to shelve plans to take on bigger
loans as their revised property valuation falls way below expectations.
This comes as a growing number of mortgage providers restrict loans to
customers outside certain areas or cap the maximum amounts homeowners can
borrow at £350,000 as the credit squeeze intensifies.
Paul Welch, managing director of Clegg Gifford Private Clients, a mortgage
broker, said borrowers were increasingly being locked into expensive rates
with their existing lender as they were unable to remortgage after their
initial cheap-rate deal expired.
³We are now experiencing property valuations coming in lower than the
clients expected and lower than would be required for them to switch to a
new lender,² he said.
³We are having to get comparables of recent sales and appeal . . . with
surveyors to give customers any hope of securing their planned
remortgage.²
Clients who had bought outside London two years ago could easily have lost
5
per cent of their propertyıs value. ³This, coupled with tighter lending
criteria, means they are not going to be able to remortgage,² he said.
Some clients had to switch to interest-only mortgages to keep up with
higher
monthly interest costs. Borrowers who cannot remortgage have seen their
interest payments jump by up to 50 per cent.
Other mortgage brokers have experienced a similar trend. Cobalt Capital
said
it had noted a 10 per cent rise in the number of reduced/downvaluations in
the past four or five months.
Melanie Bien, director at Savills Private Finance, said lower than
expected
valuations were becoming more of a problem in certain sectors, such as
new-build flats in city centres.
Surveyors are being more conservative not to overshoot a propertyıs value
in
a stalling market. The slowdown in property transactions has made it
harder
to gauge values as the information surveyors have about similar deals is
quickly out of date. One surveyor said high-value properties were a
particular concern.
Barry Hall, at the Royal Institution of Chartered Surveyors, said the fact
that there were more repossessed properties coming on to the market was
also
distorting values.
http://www.ft.com/cms/s/0/a93e3ff4-f786-11dc-ac40-000077b07658.html
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