Millions of homebuyers could soon receive mortgage offers in minutes thanks to automatic property valuations that enable lenders to make an instant decision.

Two lenders, GMAC-RFC and Edeus, are rolling out new technology that enables them to make enforceable mortgage offers, not merely decisions in principle, within minutes rather than weeks. If the idea is adopted by other lenders, industry experts say that it could revolutionise the mortgage market.

In England and Wales the average wait for a mortgage offer is three weeks, with a further six to nine weeks before completion. Most valuations cost £250 to £350. Almost two million people in the UK have experienced delays in obtaining a mortgage offer, according to research from GMAC-RFC. It says that speedier offers could save homeowners money, reducing the chance of them losing out on a property.

Ray Boulger, of John Charcol, the mortgage broker, says: “Too many customers are inconvenienced at best and, at worst, lose a property because of delays in the mortgage offer or legal processes. Instant mortgage offers will kick-start the industry and revolutionise it for the better.”

The new technology enables lenders to use information on house prices and previous transactions held on public databases to give an accurate valuation without the need to inspect the property.

Nick Gardner, of Chase De Vere Mortgage Management, another broker, says: “It is about time. Valuations are not necessary for thousands of transactions because of the wealth of data now available. Automatic valuations could bring about a greater revolution than the proposed home information packs.”

The use of automatic credit scoring, which enables lenders to determine a borrower’s eligibility for a loan on the spot, has also been growing rapidly. Nearly half of all lenders now use instant credit scoring.

Homebuyers will be eligible for instant offers as well as remortgage customers, but they will still have to go through the full conveyancing process, which can take six weeks. However, remortgage customers could receive funds within five days.

Alan Cleary, managing director of Edeus, says: “It is not the speed of offer but the speed of completion that really counts. In the future this kind of rapid completion should be available to all customers, both purchase and remortgage.” Edeus will also offer instant loans to buy-to-let and sub-prime customers.

Not all homeowners will benefit. Only properties in areas where there are similar properties will be eligible for automatic valuations, so buyers of unusual properties in isolated areas could miss out. They will also be available only to borrowers who have large deposits. Melanie Bien, of Savills Private Finance, another broker, says: “A low loan-to-value (LTV) percentage is essential. Any application above 90 per cent LTV, which is much more commonplace, particularly with first-time buyers, will default to a traditional, manual valuation. This is to keep the risk to the lender at a minimum.”

GMAC does not charge extra for the instant offer, while Edeus will charge a fee similar to the cost of a standard valuation.

However, the size of deposit and the cost of the service is likely to change as lenders get used to the new system. Jonathan Burridge, of Quantum Mortgages, another broker, says: “The LTVs and cost will start to change a few months down the line, depending on the popularity of the service.”

The industry hopes that other lenders will be forced to speed up their systems to compete. But this depends on the demand. Sue Anderson, of the Council of Mortgage Lenders, says: “Instant mortgages will continue to grow, but borrowers must respond positively if they are to catch on.”

For more on the housing market visit www.timesonline.co.uk/mortgage