Mortgage lending value (valeur hypothécaire)

Mortgage lending value is a value designed for the lender. It does not seek the most probable price today, but the amount a bank can reasonably count on if it ever has to sell the property to recover its loan, including in a less favourable market. The European CRR regulation defines it as the value determined by a prudent assessment of the future marketability of the property, taking into account its long-term sustainable aspects, normal and local market conditions, the current use and appropriate alternative uses.

The Charte de l’expertise en évaluation immobilière (the French property valuation charter) adds that it rests on income stabilised over time, that it excludes speculative or volatile elements, and that it is a conservative derivative of market value, which it can never exceed. It disregards the personality and know-how of the owner, the specific current use of the building and instantaneous price levels where these contain a speculative component.

Where the rule comes from

Title III, § 1.15 of the Charte (6th edition, November 2025) defines mortgage lending value and lists the factors to be taken into account and those to be left out. The EVS 2025 deal with it in EVS 2, § 7, and point out that the report must state that the basis of value adopted is mortgage lending value and that market value may be different. The concept is enshrined in Regulation (EU) No 575/2013, whose 2024 revision introduced prudent value alongside it.

In a valuation report

I first establish the market value, then derive the mortgage lending value from it by adopting a sustainable income rather than the rent of the moment, a capitalisation rate acceptable to a prudent owner, and by setting aside any expectation of a rise. I set the two figures side by side and explain the gap. The report specifies the definition applied, because it varies from one country and one institution to another, and mentions the market observation period adopted to judge the stability of the income.

Example

An investment building of six flats in southern Brittany. Passing rents: €48,000 a year; sustainable rent adopted after analysis of the leases and of vacancy: €45,000. Market value by comparison and by capitalisation at 5.5 %: €860,000. For the mortgage lending value, I adopt a rate of 6.25 % on the sustainable income, that is €720,000. The bank lends on that basis; the borrower, for their part, knows both values.

Not to be confused with

Prudent value is a methodology for applying the revised CRR, applied from market value, and not a stand-alone basis of value. Market value is the probable price at the valuation date, with no long-term horizon.