Brokers say “lowball” valuations are on the rise as home owners struggle to refinance.
Already a subscriber?Newcastle chef Mark Davis, 47, was caught in a “mortgage prison”. He’d purchased a three-bedroom home with his partner in late 2022 for $442,000, but by December 2023 the interest rate on his loan had climbed to a whopping 10.26 per cent.
But St George required Davis pay an extra $15,462 to lower the LVR to below 90 per cent, and pay $6361 in lenders’ mortgage insurance – completely outweighing any benefit of switching.LMI usually applies to loans with loan-to-value ratios of 80 per cent or more. Loan-to-value ratios are calculated by taking the loan amount and dividing it by the price of the asset.
“There’s growing concern that homeowners are falling victim to lowballing tactics employed by some lenders, which can lead to cost blowouts that can take years to pay off,” she says. Raj Khatak, the director of mortgage broker Domium, says although it’s normal for lenders to diverge on valuations, it’s “a mystery” how they can diverge so widely.“So how, in one week three valuers can go to a house for a full valuation, and one gives me $1.28 million, one gives me $1.48 million and one gives me $1.52 million? There’s a difference of $350,000 there, and I don’t know what they’re looking at in the house or not to give those different numbers.
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