Mortgage lending value
A short, practical note on mortgage lending value, with the public definition from IVS / Red Book (effective 31 January 2025).
In my practice, mortgage lending value is a prudent, long-term value that some European lenders must use, by statute or regulation, instead of market value for secured lending. The Red Book treats it as an alternative basis: it often comes with prescribed approaches or assumptions, and the result can be markedly different from market value. My first question on any lending instruction is which basis the lender’s rules require. I then state that basis and its definition in full, so nobody reads one number as the other.
“[…] in some jurisdictions alternative bases may be recognised or expressly required, for example, as a result of statute or regulation, ‘mortgage lending value’ being one example.”
Source: Red Book Global Standards, VPGA 2 Valuations for secured lending, para 5.1
“These alternative bases may, and often do, involve prescribed approaches or assumptions and may therefore result in a value for the purpose of secured lending that is quite markedly different from market value […]”
Source: Red Book Global Standards, VPGA 2, para 5.1
Common confusion
Mortgage lending value ≠ market value: it is a prudent basis set by statute or regulation, and the figure can be markedly different.