Halifax Hikes Mortgage Cost by Undervaluing Properties

It has become known lately that one of the largest British mortgage lenders – Halifax – undervalues properties despite the fact that the most recent reports demonstrate rise in house prices. A 4% increase in house prices is even reflected in the index compiled by the bank itself - the Halifax house price index. A 7.8% rise was reported in Nationwide’s Index. Yet, Halifax is said to under-price the properties by as much as 35%, which fact is inevitably reflected in the cost of mortgage. A large number of UK mortgage brokers have already reported undervaluation by Halifax, which is, by the way, owned by the Lloyds Banking Group. Not only this under-pricing policy increases the cost of mortgage borrowing, it also prevents borrowers from qualifying for bank’s best mortgage deals. For instance, at Halifax, a borrower with 10% equity is generally charged as much as 6.19% in mortgage interest rate for a 5-year fixed mortgage deals. However, if the borrower had realised that they actually have 40% equity, they’d certainly turn to HSBC, which offers a record-low mortgage interest rate of 4.95%. It is worth noting that Halifax imposes the practice of under-valuation even of industry professionals. For example, Mr. Simon Lord and his family had their house under-priced by as much as 25% by Halifax when trying to remortgage this July. It cost them a lot of nerves and £1,000 to get physical valuation from one of the Halifax’s surveyors, which resulted in a 35.6% higher house price. UK mortgage brokers say they are shocked to see Halifax massively doing things like this, especially given the fact that Halifax claims to update its Index on a quarterly basis and to have a robust valuation process in place. British mortgage brokers say that borrowers should be extremely careful when having their property priced because the right valuation determines the choice of available lenders.