Press Releases

“The Financial Services Authority Consultation paper today on responsible mortgage lending is something we strongly support. The fact that almost half of new mortgages between 2007 and the first quarter of 2010 were provided without a customer having to verify their income is quite obviously not a sustainable or responsible state of affairs. While this has left many current homeowners living beyond their means and some lenders badly affected.  The resulting financial situation has also made conditions for first time buyers the worst they have ever been.

“High loan-to-value mortgages can be used responsibly by lenders to ensure that people with a good credit profile, but a small deposit, can get on the property ladder. Genworth Financial believes the solution to the current problems in the market lies with the introduction of universal mortgage indemnity insurance for high loan-to-value loans.  Regulators and policy makers should consider building on international precedents set by countries such as Canada, where borrowers, lenders and the overall system are protected by prudent standards and permanent monitoring by mortgage insurers for LTVs of 80% or higher.

“Whilst a stronger regulatory framework in this industry is a positive thing, there is a requirement for checks to ensure an alignment of interests.  Mortgage indemnity insurance helps lenders manage high LTV risk.  By accepting this risk, specialist insurers such as Genworth provide a ‘second pair of eyes’ to facilitate higher standards of mortgage origination, with lower levels of default.  The product therefore acts as a balancing mechanism to ensure interests are aligned. The introduction of compulsory mortgage indemnity insurance for high loan-to-value loans has already been proven to bring positive effects for lenders, customers and the wider economy, and could enable affordable mortgages for a greater number of people, rather than restricting them further.”

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