With mortgage rates still hovering near multi-decade highs, homeowners are opting to hold onto their ultra-low first mortgages. Instead of refinancing, they’re tapping into their equity through home equity loans and HELOCs to finance renovations, cover tuition, or consolidate high-interest debt. 

Lenders are stepping up with a broader menu of second-lien products to meet this growing demand. But while the products themselves have modernized, the valuation process that underpins them often hasn’t. One outdated holdover? The routine reliance on the traditional “full” appraisal, even in cases where it adds more friction than value. 

As we navigate 2025 and face both an appraiser shortage and capacity issues, it’s time to challenge that default and embrace a smarter, more flexible approach. 

Full appraisals have their place — but not in every case 

To be clear, there’s nothing wrong with the traditional full appraisal. It’s comprehensive, reliable, and for many loan types it is still indispensable. But in the context of home equity lending — where loan amounts are smaller, the lender bears much of the cost, and speed is critical — defaulting to a full appraisal can create more drag than value. 

Traditional appraisals average around $600 in many states and can take up to 1-2 weeks to turnaround. Waiting two weeks for a valuation might be justified for a high-stakes purchase or a major cash-out refinance. But for a $50,000 HELOC on a well-understood property with plentiful comps and a low-risk borrower with a strong credit and repayment history, that approach introduces unnecessary cost, delays, and frustration for borrowers and lenders alike. 

The better news is that we now have faster, data-driven alternatives that can deliver the same confidence without the slowdown. 

AVMs have evolved, and they’re already delivering value

Automated valuation models (AVMs) aren’t new, but today’s versions are vastly improved. Modern AVMs leverage real-time MLS feeds, recent transaction data, property condition reports, and machine learning to produce faster, smarter, and more reliable results. They’re no longer just approximations; they’re decision-grade tools. 

Confidence scores (the AVM’s confidence level in its model accuracy) in the 80–90+ range are increasingly common. Those scores correlate with final appraised values within a 10% to 15% range of appraisal results from traditional reports for a wide range of properties. That’s well within tolerance for many second-lien lending scenarios and provides a high level of risk mitigation. 

In fact, AVMs are already playing a central role in servicing portfolios, securitizations, and post-close valuations. The next step is simple: Utilize them earlier in the origination workflow, especially for lower-risk home equity transactions.   

Borrowers expect digital speed, and your process should deliver

Today’s borrower expects speed, clarity, and convenience — not because of what their local lender offers, but because of what companies like Amazon, Uber and Instacart have trained them to expect. 

A home equity loan isn’t a life-altering mortgage refi. It’s often a tactical move — to upgrade a kitchen, pay tuition, or consolidate and manage high-interest debt. Today’s borrowers don’t want a long process full of paperwork and waiting. They want a “yes” or “no,” fast. 

AVMs and hybrid valuations deliver that. When deployed within defined guardrails, they accelerate turn times, reduce fallout, and enhance the borrower’s experience without compromising credit risk. The goal isn’t to replace the appraiser; it’s to apply their expertise where it adds the most value. 

It’s not about removing appraisals — it’s about using them smarter 

There will always be a place for full appraisals. Unique homes, rural properties, agency loans, and high-dollar or high-complexity loans benefit from the deeper analysis appraisers provide. But the default use of a full appraisal on every transaction, regardless of size, risk, or data availability, is increasingly outdated. 

The smarter approach is a valuation cascade: 

• Start with an AVM plus a Property Condition Report. Here you get an eye on the property and value range very quickly.  
• Escalate to a hybrid or desktop appraisal if needed. 
• Use a full appraisal only when complexity or low confidence in the value from the previous two options warrants it. 

This structured approach, known as a valuation cascade, gives lenders agility, balances risk, and delivers borrowers the seamless experience they expect, all while maintaining underwriting integrity. 

Regulation allows for more flexibility than many assume 

Here’s something many lenders overlook: Federal regulation doesn’t require a full appraisal for home equity loans under $400,000. Alternatives are allowed. Often, the “requirement” for a full appraisal is self-imposed — a legacy policy, not a legal mandate. 

That means the barrier isn’t regulatory — it’s operational. Lenders can, and should, revisit their internal policies to better align with modern tools and borrower expectations. 

Used within clear risk thresholds and accompanied by thoughtful escalation protocols, AVMs are well within regulatory guidelines and capable of supporting sound credit decisions. Regulators recognize this. The question is: Are lenders ready to streamline the consumer lending process and utilize these tools? 

The technology is ready and rapidly advancing 

AVMs aren’t standing still. Advances in artificial intelligence are accelerating their ability to interpret property photos, read listing language, analyze market dynamics, and assess conformity. Today’s advanced AVM models can flag whether a property blends into the neighborhood or stands out and adjust accordingly. 

The pace of improvement is only increasing. As these tools mature, the case for modernizing the valuation process becomes even more compelling, not just in theory, but in real-world practice. 

Modernization isn’t disruption — it’s evolution 

Modernizing your valuation strategy doesn’t mean upending everything. It means making smarter decisions about when and how to deploy the tools you already have. It’s a shift in mindset from “prove the AVM is sufficient” to “show me when we need more.” 

This won’t happen overnight, but it starts with some key decisions on the part of a lender to examine why you are defaulting to the full appraisal. Often, lenders have legacy policies created years ago under different assumptions, and these policies have remained in place without considering the advancements in valuation technologies. Challenge why those policies and assumptions are in place within your lending institution, and encourage thoughtful review of these advanced valuation capabilities.    

In home equity lending, the real edge will belong to those willing to modernize with purpose and confidently lead. Similar advancements are manifesting themselves in the secondary market lending side as well. Lenders that step into that modernization workflow will be best positioned to capitalize on the market opportunity.  

Mark Walser is the Senior Vice President of Class Union & Digital Valuations at Class Valuation.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: zeb@hwmedia.com.

Investments into home ownership, housing infrastructure and new social and community housing are among the measures in the Queensland 2025-26 budget announced today, aimed at providing more Queenslanders a place to call home.

Premier David Crisafulli said the budget was striving to secure the housing foundation for Queensland to have the highest home ownership rates in the nation during the next decade.

 “We’re delivering practical support to unlock home ownership for young Queenslanders and in indigenous communities, while building more homes in every corner of our State,” he said.

Across five years, $8.1 billion will be invested to help lay the foundation to deliver one million new homes over the next two decades. 

Boost to Buy boon

A new nation-leading home ownership scheme to help reduce the deposit gap for first-home buyers was announced, with the $165 million Boost to Buy scheme.  

The scheme delivers an equity contribution of up to 30 per cent for new homes and 25 per cent for existing homes with a sale price of up to $1 million, for households earning $225,000 or less.

The Boost to Buy scheme is in addition to Home Buyer Grants, which also received a $30,000 boost until June 2026.

Real Estate Institute Queensland chief executive Antonia Mercorella has praised the broadening of the Boost to Buy scheme as a smart, timely step to match market conditions and help more Queenslanders achieve home ownership.

“We called for expanded access to shared equity because we know high deposit hurdles are keeping aspiring buyers from getting onto the property ladder,” she said.

She said the income eligibility thresholds reflected modern property prices across Queensland, making it the most attractive in the nation.

“In Greater Brisbane, the annual median house price is $895,000, and in the Brisbane LGA it’s $1.21 million,” she said.

“Even for units, annual median unit prices are $770,000 and $735,000 for the Gold Coast and Sunshine Coast respectively.

“The generous cap ensures the scheme is relevant in all corners of our state including high-demand areas like Brisbane, the Gold Coast, and Sunshine Coast, where the median house price now sits above $1 million.

“Without this adjustment, the scheme risked being out of touch with the reality faced by many first home buyers today.”

Property Investment Professionals of Australia chair Nicola McDougall said the budget showcased that Queenslanders achieving property ownership was front and centre, and praised the pragmatic and market-aligned initiatives.

“It’s clear that the Queensland Government is serious about addressing the housing crisis as well as helping more young people achieve property ownership, given the property price and income thresholds for the new Boost to Buy scheme are more in-line with market and economic realities,” she said.

 A streamlined ex-gratia process to support housing delivery

Plans to streamline Queensland Revenue’s ex-gratia relief process for foreign-owned housing projects that deliver economic or community benefits was welcomed by REIQ.

“When housing projects meet the public interest test, whether by enhancing community outcomes or increasing much-needed housing stock – then relief from punitive surcharges should be a straightforward and swift process,” Ms Mercorella said.

“Foreign entities cop extra surcharges despite being instrumental in delivering new housing supply. Until now, ex gratia relief has been available, but the process has been slow and uncertain, making it unworkable for many projects.

“Today’s budget commitment to reform and fast-track this relief is an encouraging step that will drive capital to Queensland and help get more housing projects off the ground.”

Other measures announced

A $2 billion Residential Activation Fund was also unveiled, which is set to fast-track critical infrastructure needed for housing, unlocking critical enabling infrastructure and accelerating new housing developments across the state.

Deputy Premier Jarrod Bleijie said the fund was set to unlock thousands of new homes across Queensland.

“We are unlocking the land for housing and delivering the critical infrastructure needed to get new homes out of the ground sooner,” he said.

“We’re delivering funds to support shovel-ready projects, to help get homes built faster.”

Looking ahead to what’s next

Housing Industry Association Queensland executive director Mike Roberts said while the additional funding and opportunities to assist new home buyers get into housing were welcomed, the issue of supply remained.

“The funding that’s been set aside to assist the delivery of social housing was necessary and is also welcome, but at the end of the day, it’s the private sector that’s going to build the bulk of the housing that’s needed to meet the growing demand in Queensland,” Mr Roberts said.

“And the government needs to get on and do everything that needs to be done to facilitate an increase in the supply of housing.”

The supply crisis remained Queensland’s most pressing housing challenge, Ms Mercorella said, while stamp duty reform remained high on REIQ’s wish list.

“It is a long-standing policy direction of the REIQ to see a phased transition to a land tax-based model starting with first home buyers, as well as abolishment of stamp duty for downsizers aged over 55 moving to a home with fewer bedrooms or a retirement home,” she said.

Ms McDougall said she would welcome an opportunity to discuss policies that will not only encourage more property investors into the market, but also motivate them to stay long-term to underpin a stable supply of rental accommodation across the Sunshine State.

“Removing stamp duty disparities between owner-occupiers and investors, and updating land tax thresholds to match today’s values, would be simple but powerful next steps,” she said.

The post Queensland Budget 2025: First-home buyers get a leg up with Australia’s most generous shared equity scheme appeared first on realestate.com.au.

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