Possession lawyers Moore & Blatch are calling for lenders to integrate the Land Registrys new Repeat Sales Regression index into lending decisions to minimise the risk of losing out should the property need to be repossessed.
Moore & Blatch believe that, by using the data, lenders can protect themselves from losses if the property has to be repossessed as the data will provide a much more accurate reflection of the demand for property, and hence its saleability, in any given area.
The RSR index is the first House Price Index measuring average price changes in repeat sales on the same properties. At present it contains details on over seven million sales, of which just under 1.5 million are identifiable matched pairs.
With mainstream lenders now lending at high multiples and high LTVs, Moore & Blatch believe that saleability is critically important. Typically, repossession results from a change in personal circumstances, such as divorce, illness or unemployment, and affordability at the time of purchase cannot take account of these factors
Paul Walshe, head of lender services at Moore & Blatch, says: The new RSR index is unique. Being able to tailor lending to specific areas of the country will be highly beneficial. In areas of low or negative growth, lower multiples or LTV could be used to minimise risk of loss in case of repossession. Conversely, higher terms could be offered in areas of rising growth.”