Brokers report falling valuations
By
Adam Smith
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14/10/2011 5:00:00 AM
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Brokers are reporting more conservative valuations, resulting in increased costs for borrowers, it has been claimed.
A Loan Market poll has found more than 60% of the company's brokers have seen falling valuations in the September quarter. The company has claimed lower-than-expected valuations are the result of a weak real estate market and a conservative trend among valuers.
"Valuers have been trending on the conservative side when assessing what properties are worth," Loan Market COO Dean Rushton said.
Of the 61% of brokers who reported falling valuations, 30% said valuations were down more than 10%, while 31% stated they had fallen up to 10%. Only 2% of brokers reported an increase in valuations.
Rushton said the falling valuations could result in borrowers having to pay a bigger deposit, changes in the expected LVR and some borrowers being hit by LMI costs.
Australian Property Institute president Philip Western told Australian BrokerNews in September that valuers faced enormous rises in the cost of PI cover, resulting in some valuers being driven out of the industry. He predicted that a loss of PI cover combined with lenders trying to force valuers to contract out of proportionate liability agreements could see an erosion of professional standards in the industry.
Related stories:
PI crisis could erode valuation standards
Challenging valuations 'absolutely appropriate': RP Data
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