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Homeowners who had been blocked from switching to cheaper mortgage deals have been rescued by technology that allows banks to value properties without visiting.
The housing market was effectively closed down by the Government, causing property sales to ground to a halt with valuers banned from visiting homes.
Some existing homeowners had been able to remortgage to cheaper deals, but many found that banks were prepared to lend only to wealthy customers or those with a large amount of equity in their home.
Without a physical valuation, few banks are offering loans to those borrowing more than 60pc of their property’s value. Given mortgage rates are at historically low levels, homeowners unable to remortgage could be left paying more each month than necessary.
Now, several lenders will allow applications where a "remote valuation" has been carried out. These valuations allow banks to use industry data, such as prices of nearby homes, to estimate the value of a property.
Virgin Money and Clydesdale Bank are two of the most recent banks to use remote valuations to lend up to 75pc of a property’s value. Nationwide said yesterday it would now lend to customers with a 15pc deposit.
In some instances, HSBC said it would lend up to 90pc of a property’s value without a physical valuation.
Chris Sykes of Private Finance, a mortgage broker, said Santander would lend up to £500,000 to customers after raising the £350,000 limit it had put in place at the start of the crisis.
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Despite the increase in remote valuations, Mr Sykes said some homeowners would still be blocked from new mortgage deals, such as those in new-build properties or located in areas with no price data available.
“The restrictions are especially affecting borrowers looking to remortgage,” he said. “Lenders restricting loans in terms of loan and deposit sizes is a short-term measure for while they see how Covid-19 is going to affect the market in the long term.”
Aaron Strutt of Trinity Financial, another broker, said lenders such as Precise and Kent Reliance, which had halted lending, had returned to the market using remote valuations. Both had paused their lending at the start of the Covid-19 crisis.
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