Leading mortgage lenders have thrown a spanner into the works for estate agents over the weekend after it was revealed that many of them are now capping their lending for homes over £500,000, a move that could severely disrupt the remaining sales going through the market.
Virgin Money, Barclays, Lloyds, Clydesdale, Aldermore, Precise Mortgages and Kent Reliance have all set caps on how much they will lend for prime properties, saying that the inability of valuers to visit addresses means lending has become too risky for higher-value homes.
The mortgage caps imposed by these lenders vary from £500,000 to £3 million depending on each lender’s appetite for risk and the location of the property.
Aaron Strutt of broker Trinity Financial says that lenders are no longer able to rely on Automated Valuation Model software and Google StreetView to assess a property’s value in the current economic environment, The Times reported.
The paper highlights one Barclays’ customer who was told by the lender that it would not offer any size of loan on properties worth more than £700,000 in London and £500,000 outside the capital.
This follows other restrictions introduced by lenders earlier this month including capping loan-to-value at 75% and tightening lending criteria to exclude bonuses, overtime and commission as income.
The Times piece directly contradicts comments by Knight Frank last week that prime market lenders were softening their stance to online valuations.
“Lenders have been approaching valuers to better understand what is required to provide robust desktop valuations in order to make decisions on their processes and policies”, said Katie Parsonson, head of Knight Frank’s London Valuation and Advisory team.