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Banks relax valuation policies

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Malavika Santhebennur 5 minute read

Major bank ANZ and non-major bank Gateway have loosened their credit and valuation policies.

ANZ and Gateway Bank have both announced an easing of their valuation policies to reduce the time required for formal approval.

ANZ has announced that, effective from 17 February, it is updating the valuation policy rules used to determine which type of valuation is required to confirm the fair market value (FMV) of a property for an ANZ home loan application.

The updates to the valuation policies are:

  • Increasing the threshold property value for when a long form valuation is required so that long form valuations are only required for properties over $5 million instead of the current $3 million; and
  • Requiring a full valuation for all applications that include lender’s mortgage insurance, for which the current requirement only applies to properties with an LVR above 90 per cent.

In explaining the reasoning behind the changes, ANZ stated in its update that currently a large proportion of loan applications require a full valuation.

“However, the quality of the property information held by ANZ means we can use both modelled estimates and kerbside valuations more frequently to determine fair market value instead of having to get a full valuation.”

ANZ said the policy for luxury properties will remain the same. A property worth $3 million is still considered a luxury property and therefore the luxury property policies will apply.  

If a broker has ordered a valuation through the valuation system prior to 17 February but started the application post 17 February, then the new policy will be used to determine if the existing valuation is valid.

“If the broker needs to dispute the need for a new valuation, they can provide a screenshot of the order dated prior to 17th February into assessments with their submission,” ANZ said.


Gateway Bank loosens policy for AVM acceptance

Following broker feedback, non-major bank Gateway has increased its tolerance for automated valuation model (AVM) acceptance in a bid to reduce the time to formal approval of a home loan.

The bank has lifted the maximum loan-to-value ratio (LVR) for AVM acceptance from 60 per cent to 80 per cent for properties up to $1.5 million, effective 10 February.

Gateway Bank’s head of customer operations, Zeb Drummond, told The Adviser: “With AVM reports being instantaneous, Gateway Bank can now formally approve a new application on the first touch without waiting for a short form valuation report, which can take up to a week.

“We also hope to increase the certainty of decision making for brokers before they submit an application on behalf of their clients,” Mr Drummond added.

“As many brokers have access to the same AVM reports, they can submit a deal to Gateway Bank with greater confidence, knowing a valuation isn’t going to torpedo the application.”

The bank also lifted the maximum LVR for desktop valuation from 70 per cent to 80 per cent for properties up to $1.5 million.  

The bank said the LVR for contracts of sale (COS) remains unchanged at 60 per cent for properties up to $1.5 million. The policy stipulates the COS must have been executed within six months of approval.

[Related: Major bank slashes floor rate]

Banks relax valuation policies
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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.


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