AVMs in 25% of sales by 2011

The Council of Mortgage Lenders predicts that automated valuation models will be used for a quarter of house sales by 2011.

The CML forecasts that the use of AVMs will grow sharply in the next four years as lenders utilise the technique for higher LTV deals as an alternative to physical inspections.

It estimates that by 2011, lenders will use AVMs to value property in a quarter of house purchases and more than half of all remortgages.

However, lenders foresee only modest growth in AVM use this year, and the CML estimates they will only be used for 3% of house purchases and 28% of remortgages in 2007.

The trade body has found that len-ders representing 70% of remortgage business will consider AVMs for LTV ratios up to 75% this year. And those providing one-fifth of house purchase business will consider them in cases when LTVs are less than 75%.

By 2011, lenders representing about one-third of the market expect to use AVMs for LTV ratios up to 80%.

A spokesman for the CML says: “There is reticence about using AVMs when LTVs exceed 80%.

“There is more appetite for this in the remortgaging sector, but lenders in our survey showed no great enthusiasm for pushing beyond that level at this stage.”

Michael Bolton, chief executive of edeus, says: “This is a brave forecast. We would not be as bullish as these figures suggest.

“But the use of AVMs will become more the norm than the exception.”