Evaluating Your Portfolio in an Uncertain Market – An eBook for Lenders of All Sizes
Blog Series Part 3: Canadian Real Estate Market Focus: Toronto vs. Vancouver – Managing Your Risk
In our previous blog in this series we covered the topic of placing marketing dollars in the Toronto and Vancouver real estate markets. As important as it is to monitor what happens in Canada’s real estate markets as it relates to placement of marketing dollars, we would argue it is even more important to monitor what happens in Canadian real estate markets with respect to risk management.
When we look at Toronto and Vancouver, we see two completely different markets headed in two completely different directions. This is in large part due to what has been fueling these markets and the changes made by provincial and local governments. In Vancouver for example, a large part of what has been fueling the market has been foreign investment. A recent tax on foreign buyers in Vancouver has caused the market to cool. As recently as this past January, the Business News Network reported on RBC’s speculation that Toronto is likely to also introduce measures to cool the market after 2016 finished with record highs – check it out here: http://www.bnn.ca/cooling-measures-increasingly-likely-for-toronto-housing-market-rbc-1.658570.
These developments create a unique challenge for lenders because your level of risk is not just dictated by the character of your customers but also by your security. So, how can you decide which areas and property types are a safer investment in potentially turbulent markets?
Managing risk comes down to having the right technology and resources. One way to manage risk is by taking advantage of the ability to access objective and comprehensive property valuations to monitor collateral risk.
Automated valuation models are an excellent tool to do this. Automated valuation models play a significant role in the lending process by assisting mortgage lending financial institutions throughout different stages in the lifecycle of a mortgage.
- During the collateral adjudication stage, automated valuations and integrated fraud checks help to assess collateral risk related to the mortgages.
- In changing markets and post funding, lenders can use valuations to provide an ongoing value assessment of their overall lending portfolio and also to identify key markets that are on the decline.
Automated valuation models empower lenders with the most possible data at the click of a mouse as it relates to properties being financed and also with respect to enforcing on security.
Automated valuation models have long been relied upon by banks and in past years have also become available to lenders big AND small; credit unions, mortgage investment corporations, finance companies, trust companies and private lenders can also take advantage of this very intuitive technology.
For more information about managing risk in Canada’s real estate markets and automated valuation model technology please visit Purview today at https://purview.ca/.
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