NEWS RELEASES click below
21/12/2004 New valuation system is ‘robust and auditable’
2/12/2004 EVR to save time and money on home loan approvals
WHAT'S IN THE PRESS click below
9/02/2005 Australian Financial Review (1107 words) Banks warned on loan standards
‘Australia’s prudential regulator has warned banks against lowering their credit standards in an attempt to ramp up business lending in response to a slowdown in the home loan market.’
Summary: APRA executive chairman John Laker warns banks about using property security in the assessment of business loans. With property prices falling commercial lenders should lend against the viability and cash flow of the lender rather than rely on collateral if things go wrong. Banks should review their growth ambitions in the light of expected growth in overall credit in Australia. More…
4/01/2005 Australian Financial Review (563 words) Banks under pressure on dividends
’The big banks start the new year with their tightest capital position in a decade and the need to keep increasing dividends despite slowing earnings growth.’
Summary: Analysts say reductions in bank capital ratios could trigger higher bad-debt levels as economic growth slows, while dividend payout ratios are increasing to the point of unsustainability. Dividend payouts need to be increased to entice shareholders who might be concerned that the end of the boom in home mortgage lending will affect banks’ growth prospects. However, APRA says it is not concerned about a big increase in bank shareholder payouts. More…
21/12/2004 Australian Financial Review (456 words) Banks must be alert to dangers
‘A prudential regulator has to be prepared to be a party pooper. So when the chairman of the Australian Prudential Regulation Authority (APRA), John Laker, lectures mortgage lenders on the risk of desktop and “drive-by” housing valuations, lenders should take note even if the outlook seems fine to them.’
Summary: The point is made that the Commonwealth Bank’s plan for home valuations without property inspections is not necessarily something to be alarmed about. While Dr Laker might be concerned that complacency in the valuation process could lead to more weakening in credit quality, the valuation process should be open to innovation and scrutiny of costs. It says the economy is buoyant, mortgage defaults are at exceptionally low levels and the housing market is cooling. More…
21/12/2004 Australian Financial Review (889 words) Property valuations under scrutiny
‘The Australian Prudential Regulation Authority is reviewing the property valuation practices of the big banks because of concerns about declining credit standards as some lenders consider approving loans without on-site inspections.’
Summary: APRA chairman John Laker expresses concern about formal property valuations being replaced by ‘drive-by or desk valuations’. His statement coincides with preparation by the Commonwealth Bank to trial a desktop mortgage valuation system that no longer uses actual inspections, and with claims by valuer groups that removing site inspections from the valuation process ‘erodes what had been a high-standard, professional valuation process’. APRA is surveying the extent of desktop valuations and will review its findings and discuss them with the industry. The article refers to extensive work carried out by the Commonwealth Bank on what it calls ‘Residential property Reviews’. It quotes executive general manager for mortgages Geoff Austin as saying the desktop audits, which would only be carried out by qualified valuers, were much quicker and cheaper than the old system involving inspections. More…
20/11/2004 The Age (668 words) No credit for banks as hard sell raises the risk of bad loans
‘Roll up…they’re handing it out. In a speech to a Committee for Economic Development of Australia dinner this week, Reserve Bank governor Ian Macfarlane metaphorically grabbed the banks by their shoulders and have them a good shake for allowing a sales culture to infect their credit policies.’
Summary: Columnist Alan Kohler discusses the rise in debt servicing ratios allowed by banks and how this is worrying Reserve Bank governor Ian Macfarlane and APRA chairman John Laker. He refers to conflict between the valuers and banks over valuation practice, and that while the API, APRA and the Reserve Bank probably have a point, the API is acting like a valuers’ trade union ‘trying to maintain its members’ activity and income’. More…
2/10/2004 Sydney Morning Herald (576 words) Virtual valuers versus human touch
‘The debate on desktop valuation has escalated with a number of independent parties now calling for a thorough review of the proposals.’
Summary: Glen Coonan, the managing director of independent property advisers and valuers LandMark White, weighs into the debate on desktop valuations. Following reports of pilot trials by the Commonwealth Bank, and condemnation by the Australian Property Institute, he says there could be a place for desktop valuations. While cautioning about a risk of lower valuation standards if desktop reviews were allowed to replace mainstream valuations, he says the valuation industry must take on new technology and move with the times. Chief executive Brad Piltz adds that the risk coverage needs to be balanced, and that valuer-assisted valuation models are ‘far more accurate than straight statistical-driven models’. More…
18/09/2004 Sydney Morning Herald (573 words) CBA’s desktop trial angers valuers
‘A battle is looming between the Australian Property Institute and the Commonwealth Bank which could have lasting negative effects on the valuation industry.’
Summary: The article discusses the response by the valuation industry to a Commonwealth Bank pilot of a desktop assessment system for residential properties in Sydney that does away with the need for physical inspections. The API argues that the move to desktop valuations will have a negative impact on valuers’ professional standards. However, the bank says costs are significantly reduced and customers benefit by faster and more efficient processing of loan applications. More…
07/2004 Reserve Bank of Australia Bulletin Measuring House Prices
Summary: The article discusses some of the issues involved in measuring housing prices and assesses what the latest data available are indicating about the movements in house and apartment prices in Australia in 2004. It concludes broadly that prices for houses and apartments fell thus far in 2004, and that this result was mainly due to developments in the two largest cities.
The article mentions as key issues the timeliness, comprehensiveness and quality of nationwide housing price data and examines critically the measures used by the Real Estate Institute of Australia, the Commonwealth Bank of Australia, ABS, Residex and Australian Property Monitors. It says the Reserve Bank, the ABS and Australian Treasury have been exploring ways of improving data. More…
05/06/2004 Australian Financial Review (377 words) Experts at odds over ups and downs
‘Home owners may be disappointed that prices are falling, but a nasty fight has erupted in the statistical world about how fast.’
Summary: In the wake of a statement by Reserve Bank governor Ian Macfarlane that information on house prices was “hopeless” and “probably the weakest link in the price data in the country”, conflict erupts between the Real Estate Institute of Victoria and Australian Property Monitors about the extent of price falls. To complicate the issue, the Australian Bureau of Statistics says prices slightly rose in the March quarter, while APM, Commercial Property Monitors, Residex, the Commonwealth Bank and the REIA report falls. More…
EVR to save time and money on home loan approvals | Back to Top
Pacific Property Technologies has launched a new system for the Australian banking sector that promises to make borrowing money less of a chore for homebuyers.
A major bank has contracted to undertake a national rollout through 2005 and several other lenders have indicated they will follow suit.
Called EVR (Electronic Valuer Review), the system is designed to deliver faster assessments of the borrower’s assets to the bank – usually within 24 hours – which in turn means a faster loan approval with certainty.
“EVR provides banks with a new found ability to better service the customer and make significant cost savings,” said Carl Hampel, marketing manager for Pacific Property Technologies, which developed the system with assistance from banks and valuers.
“EVR is all about convenience and quality control. Also, through efficient property matching, it can identify fraud and two-tier marketing scams.”
Mr Hampel said bank customers benefited because they were not required in most cases to wait at home for the traditional ‘property valuation’ and put up with a stranger walking through the house. “Previously this type of home asset assessment process often forced banks to delay approvals.”
EVR combines technological innovation, comprehensive risk profiling and valuer expertise to provide an alternative to existing assessment methods that range from ‘kerbside’ inspections to full physical evaluations.
As with other service industries, it was inevitable that the valuation industry would introduce technology to improve efficiencies, Mr Hampel said.
“Pacific has drawn on a range of technologies including high-resolution satellite photography of the properties to improve the speed and accuracy at which the bank can process the loan approval for the customer.”
Released by Media Focus Global (Nigel Dique, 02 9879 6655)
on behalf of Pacific Property Technologies (Carl Hampel, 02 9687 0667; 0405 121 999)
New valuation system is ‘robust and auditable’ | Back to Top
The company that developed a new mortgage valuation system for banks says its aim is to eliminate exactly the kind of complacency that is causing the Australian Prudential Regulation Authority concern.
“We welcome APRA’s review of property valuation practices,” Carl Hampel, marketing manager for Sydney-based Pacific Property Technologies said today. “Our method is robust and the assessments are auditable.”
Mr Hampel said the new assessment system, Electronic Valuer Review (EVR) was developed in response to the banks’ need for process, checks and balances. A major bank has commenced using EVR and others that have trialled the system are planning roll outs during 2005.
Mr Hampel was commenting on a statement by APRA chairman John Laker (AFR 21.12.04) that property valuations had become an ‘area of complacency’ within financial institutions and that methods needed to be ‘robust’.
“We don’t want to be lumped in with so-called ‘desktop valuations’, a very broad term that includes statistical models, which are notoriously inaccurate,” said Mr Hampel. “Statistical models collect general market data and apply a scaling factor to all properties based on the data, failing to acknowledge any specific risk characteristics.
“Our system has been designed to upgrade ‘kerbsides’, also known as Restricted Assessments, because they require only an external inspection and check of property records. This kind of ‘faith-based’ assessment has been used in lower and mid-risk lending environments for many years, but is increasingly seen as inadequate.
“The fact is that banks are now demanding better quality control of assessments across the board, including fully researched formal valuations in the higher-risk tier.
“Pacific has rebuilt and automated the assessment process, replacing the faith-based culture with a rigorous and auditable system of data capture and application, giving banks new levels of quality control in the ‘middle-risk’ tier and improving the efficiency of security assessment work.
“Valuer groups have expressed concern about removing site inspections from the valuation process (EVR also uses site inspections), but I suspect their real concern is about the impact of technology on their industry.”
Mr Hampel said EVR continues to rely on experienced valuers to make the assessment, but it provides them with more information to work with and makes the whole security assessment process more visible and accountable. Information supplied to the valuer includes recent sales, photos, maps and other data.
“Any anomalies or lack of data automatically triggers a full valuation inspection.
“Essentially what Pacific has done is take an existing out-of-date practice and rebuild it in line with modern management practice. Banks want compatibility with new ‘high-tech’ credit management systems, audit capability, acknowledgement of abnormal risk factors and provision for collection of data for later use or reference.”
Released by Media Focus Global (Nigel Dique, 02 9879 6655)
on behalf of Pacific Property Technologies (Carl Hampel, 02 9687 0667; 0405 121 999)
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