Borrowers are facing increased costs as the valuations on their properties are coming in lower than anticipated due to a more conservative approach by valuers, according to Loan Market Group.
Loan Market chief operating officer Dean Rushton said a poll of the company’s mortgage brokers found more than 60 per cent had seen valuations fall in the September quarter 2011.
When asked ‘what type of movement have you seen in valuations in the past quarter compared to the previous quarter?’, 30 per cent of respondents said they were more than 10 per cent lower.
Thirty two per cent of the 148 respondents said valuations were up to 10 per cent lower, while 31 per cent said there was little change and two per cent thought they had increased.
“Valuers have been trending on the conservative side when assessing what properties are worth, and with many industry analysts forecasting some short-term softening in the market, there will be an impact borrowers need to be aware of,” Mr Rushton said.
“If someone is purchasing a property for a certain dollar value and the valuation comes back and says the market price is actually less, then this impacts on the deposit required and the LVR.
“A consequence here is that borrowers may have to pay Lenders Mortgage Insurance.”
Mr Rushton said borrowers need to keep sight of their long term goals when entering the property market. He said purchasers should ensure they have room to move on their LVR if the value is reduced.