Lender's mortgage insurer Genworth Financial’s acting chief executive officer Paul Caputo has dismissed claims that the role of LMIs has been marginalised on the back of lower loan-to-value ratios (LVRs).
Mr Caputo revealed that the value proposition of LMIs was more compelling than ever, particularly in an economic climate of growing house price appreciation and rising interest rates that make affordability an increasing problem for First Home Buyers.
Rising funding costs have affected the banks’ propensity to lend to high risk borrowers, which has made the insurers ability to provide lenders and borrowers with access to 95 per cent loan to value (LTV) business even more valuable.
“High LVR loans definitely still have a place in the market,” he said.
“First home buyers are still very serious about owning their own home and thus require higher LVR loans.
“First time buyers account for approximately 30 per cent of our business at present, and they continue to perform very well. While the number of first time buyers coming into the market has dropped on the back of rising interest rates, it is still important for us to support this market.”
While the global financial crisis has taken its toll both locally and internationally, Mr Caputo said Genworth had no plans to tighten its LVR policies.
“We don’t expect to tighten policy. We will continue to provide lenders and borrowers with access to 95 per cent LVR business well into the future,” he said.