Johannesburg, November 15th, 2006 – South African banks and mortgage lenders are set to realise big efficiency improvements in the near future, thanks to the next big thing in the mortgage space – AVM (automated valuation model) technology.

AVM technology has seen a faster rate of adoption than either credit scoring or affordability modelling, and is now available in South Africa through Johannesburg mortgage risk management company, Lightstone Risk Management. Describing AVM technology as “the right tool at the right time”, Lightstone MD Anthony Miller says the market for automated valuations is expanding rapidly. 

“AVMs dramatically reduce both application turnaround time and process costs” he says.  “Where traditional physical property appraisals take several days or even weeks to complete, they can now be delivered electronically in seconds at a fraction of the cost”. “AVMs are used extensively in the United Kingdom and the United States, and the key to their success lies in a rigorous analysis and a comprehensive, up-to-date national property database,” says Miller. “We provide fast, statistically accurate home valuations that can form the basis for better loan decisions across the industry.”

Lightstone’s AVM tool – built according to international best practice - combines several statistically robust valuation approaches to predict the market value of each property assessed. Lightstone’s primary source of data is the South African Deeds Office, but multiple supplementary sources are used to ensure the data is complete and up-to-date. 

“What really differentiates us is that we are a focused mortgage risk management company that develops solutions for mortgage lenders.  “We have a core competence in AVM technology and a deep understanding of the credit and risk issues faced by mortgage bankers. Our team has been hand-picked to bring together top-notch expertise in banking, credit, geographic information systems, statistics, analytics and finance,” says Miller.

“For example, each of our prediction comes with a statistically generated confidence score.  These scores are extensively calibrated and back-tested and enable our clients to set their valuation policies in a very scientific way. We anticipate saving our clients millions of rands in appraisal costs annually.  But more importantly, they will be able to improve their client service levels without taking any additional security risk onto their home loan books”.

Lightstone has also developed a suite of ‘repeat sales’ residential indices that the company plans to launch in early 2007. Miller says, “the repeat sales methodology is widely accepted globally and our indices will provide a useful alternative to those published by ABSA and Standard Bank.  They will also avoid the ‘mean vs median’ debate as they are based on price changes of specific houses rather than the change in average prices from period to period”. 

For a more comprehensive view of Lightstone’s products and services, please see www.lightstone.co.za

Issued on behalf of: Lightstone Risk Management

Client contact: Anthony Miller
Tel. No: (011) 244-8405
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Editorial contact: Kerry Botha
Tel. No: (011) 317-3750
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