Our AVM performance reaches new heights

A cloud of uncertainty has been hanging over the property market since interest rates rose causing transaction volumes to fluctuate.

Higher rate of AVM accuracy

Naturally lenders want to know how market changes affect the AVM’s ability to stay in tune with the direction of valuations.

The AVM’s resilience and performance has been a top priority for the Hometrack team.

The new capability, a statistical algorithm introduced in November, has gone on to produce a consistently higher rate of accuracy in the AVM’s results – a reassuring report for lenders.

The enhancement has had a positive effect on the robustness of AVM confidence levels and the quality and resilience of the model.

Gulf widens between HPI and AVM precision

Already a more accurate method of valuation than a House Price Index (HPI), the algorithm ensures the AVM remains streets ahead.

Since November, the percentage of times the AVM has produced a market estimate falling within 10% of a surveyor’s decision has risen by four percentage points, driving accuracy up to the highest level recorded by the team.

The increase has created an even wider gulf between the accuracy provided by an AVM and that of a house price index which only provides a valuation that falls within 10% of surveyor’s result around 50% to 55% of the time.

What does this mean for mortgage lenders’ operations?

A higher level of accuracy gives lenders more capability to increase their use of automation at mortgage origination. And at portfolio level, an accurate valuation and LTV is vital for product transfer decisions and capital risk modelling and provisioning.