Property valuations up by 23%: CoreLogic

The property data company attributed the rise partly to its products and the increased use of property data, analytical techniques and digital workflow tools, which has eliminated several manual steps from the process.

According to CoreLogic executive, product data and analytics, Tim Jenner, this has helped brokers and lenders reduce the “time to yes” for their clients amid record-high loan volumes.

He added that CoreLogic’s digital mortgage origination solutions have been designed to reduce bottlenecks in the origination process by helping ensure that the property is suitable for the borrower and an acceptable security for the lender.

He said: “We use a combination of artificial intelligence and machine learning analytic techniques, cloud-based SaaS platforms, and advanced real-time business intelligence to determine whether a mortgage can be written on a property, with an immediate decision, or whether data-powered human valuation is required.

“As we continue to focus our data strategy on specific use cases, in this case the digitisation of the mortgage process, we have seen a significant improvement in lender and broker outcomes by automating the flow of critical data points required to make an informed lending decision in real time.”

CoreLogic uses property analytics for more than 10 million dwellings dating back four decades to conduct valuations.

Its figures have also shown that digital valuations using its automated valuation model (which are processed instantaneously) and desktop valuations (can take a few hours to complete) are being used in almost half of all valuation requests by banks and lenders, and in some cases, up to 80 per cent by some financial institutions.

Onsite valuations could take three to four days to complete on average, Mr Jenner said.

He said: “The percentage of these digital alternatives to the overall makeup of valuations is increasing at a rapid rate, enabled through better upfront risk profiling of the property, improvements in data coverage and machine learning analytical capabilities, as well as improved data and technology that is now available to the fleet of valuers.”

Mr Jenner told The Adviser that other drivers of the rise in valuations include lower interest rates, increased mobility of borrowers, and an increase in construction-related finance as a result of the HomeBuilder grants (these figures have risen by 41 per cent year-on-year to date but has begun to soften).

CoreLogic Asia-Pacific general manager of financial services and insurance solutions, Milena Malev, said that borrowers have increasingly come to expect a level of digitisation in the mortgage process in line with their other online experiences.

“Across the market, we’re currently seeing a significant volume increase in refinancing, for instance,” Ms Malev said.

“Coping with this volume is a fundamental challenge for big lenders, as their legacy systems can limit their ability to easily consume the necessary data.

“In addition, 60 per cent or more of mortgage volume tends to come from brokers, so lenders are juggling broker expectations while keeping up with changing consumer needs.” 

CoreLogic’s valuation tools are used by National Australia Bank (NAB), 86 400 (which was acquired by NAB), as well as non-bank lenders such as Athena.

Tips for brokers

CoreLogic head of valuation strategy and solutions, Shelley Horton, warned that valuations are an inexact science and, as such, advised brokers to manage clients’ expectations and ensure that they do not take it personally if the valuation amount does not support their estimate.

The issue of whether valuations have been meeting borrowers’ expectations was recently explored by The Adviser, which found that while many broker clients were pleased with the valuations coming from lenders, for others they did not meet expectations.

The Adviser found that some valuations were coming in well below expectations, particularly for automated valuation models, which have struggled to keep pace with the housing market boom.

Speaking to The Adviser, Ms Horton also said the valuation industry is being challenged by record refinance volumes.

Furthermore, she flagged that requiring onsite inspections may extend the time required to complete valuations, while lockdowns may also contribute to delays.

She suggested brokers include all required documents and details upfront when ordering valuations to avoid delays, including correct contact details and a signed contract of sale for a purchase.

“Building plans and tender documents for properties to be erected are often where the process can come unstuck,” she said.

“It’s a much better experience for the customer if these details are dealt upfront so that when the valuation is ordered, it is not delayed unnecessarily.”

[Related: RedZed offers brokers online valuation tool]