When new technology emerges, it’s met with enthusiasm but also uncertainty.
Before satnavs became commonplace, drivers relied on paper maps, signage, and personal experience.
The shift to digital navigation required more than just the technology; it also demanded a mindset change.
Drivers initially distrusted automated guidance, much like we see today with other technologies.
Gradually, however, the benefits became clear, and we set aside our A to Zs and embraced the digital tools.
This journey mirrors the mortgage industry’s transition toward automated property valuations. While some lenders use digital tools for straightforward cases, others remain cautious, still relying on manual methods for simple decisions.
So, what needs to change for broader confidence in automated valuations?
The advantages are clear: increased automation speeds up decisions, saving costs for lenders and creating operational efficiencies.
Automation also benefits mortgage brokers who value speed and certainty.
Furthermore, automating routine valuations allows property risk experts to focus on complex cases, leading to better outcomes for both lenders and consumers.
Despite these benefits, only about 30% of lenders’ property risk decisions rely on automated valuations today.
A gap is emerging between those pushing forward and those taking slower steps.
This gap mainly stems from technological integration challenges, which have slowed industry-wide adoption.
The digital leaders in the field are now moving to 60% automation by using optimisation strategies and additional risk data to avoid riskier cases.
But is 60% the plateau?
The truth is we don’t know the automation limit.
However, Hometrack does see a credible and safe route through to more than doubling the current average rate of automation to over 60% by increasing automation at higher loan-to-value (LTV) brackets and tackling more complex properties using richer property risk data and models.
Testing shows that Hometrack’s automated valuations can support safe decision-making at higher LTVs, even above 85%, and for more complex segments, such as flats.
If the model provides high confidence and supports property suitability with data, it can protect lenders from undue risks.
Hometrack is addressing these challenges by focusing on data quality and model transparency.
We aim to bolster lender confidence and address concerns around property suitability, property risk, and regulatory compliance.
By incorporating trusted data at critical decision points, we can verify and learn from each evaluation, ensuring safety and accuracy.
Our efforts also include developing data-led capabilities to identify why valuers might assign a nil valuation to a property or require additional information.
We’re continuously testing data to better identify safer or riskier properties and neighbourhoods, creating a more accurate and reliable automation process.
The future of property risk lies in digitising, collecting, and analysing all relevant data for valuation and risk assessment.
For Hometrack, the goal is not only to speed up or cut costs but to enhance decision-making quality and safety.
This approach is essential to achieving safe, scalable automation—aligning with both Hometrack’s and the mortgage industry’s aspirations.
Theo Brewer is director of analytics and consulting at Hometrack
