Genworth, the provider of mortgage insurance products to lenders in the UK, has revealed that one of its existing clients, the Hanley Economic Building Society, has opted to maintain its long standing private insurance arrangements for high loan-to-values after considering the option of signing up to the Government’s Help to Buy 2 (HTB2) scheme.
The Staffordshire-based regional lender has utilised private mortgage insurance from Genworth for a number of years and recently launched a new 95% LTV product which it says compares favourably with recent products launched under the HTB2 programme and offers a whole range of product options above 80%.
Genworth recently outlined its private alternative to the Government’s HTB mortgage guarantee which offers lenders a bespoke arrangement tailored to each individual lender’s needs.
Having studied the detail of the Government Scheme, Genworth believe there are a number of advantages for lenders opting for a private insurance arrangement in order to develop prudent high LTV lending.
It argues that using the private insurance sector will allow lenders to choose both bespoke cover and premium options, and will ensure the lender is not perceived to rely on a taxpayer supported guarantee with potential reputational issues that could result if things went wrong.
Genworth also claims it will also mean lenders can access a bespoke administration and operation process, which is tailored to their specific requirements plus it will be administered in-house not by a third-party.
Finally, lenders can use Genworth’s referral process allowing them to obtain cover for loans which are deemed good risk but do not meet all aspects of the set criteria.
Simon Crone, vice president, commercial – mortgage insurance Europe at Genworth, said: “We have discussed with all our existing lender clients and outlined the key differences as we see them between HTB2 and our own private mortgage insurance guarantee proposition. We also reiterated Genworth’s commitment to the UK residential lending market and the fact we are able to provide stability and certainty to lenders far beyond the expected three-year term of HTB2.
“The responses we received have been overwhelmingly positive and we have been pleased to see existing clients, such as the Hanley, expressing their commitment to keep their current arrangements with Genworth. Many lenders have pinpointed their intention to continue working in this vein in order to be free of Government intervention in their higher lending activities and to ensure they do not have to seek support from the taxpayer at any point.
“We believe there is plenty of scope for societies and lenders to determine their own risk appetite in the higher LTV marketplace rather than have it dictated to them. They can do this by utilising private mortgage insurance from providers such as ourselves which will offer many benefits including bespoke arrangements, less reputational risk and all the administration and operational advantages we can deliver.”
David Webster, chief executive at Hanley Economic Building Society, added: “As a mutual building society, providing loans to aspiring homeowners be they first-time buyers or home movers is one of our fundamental business objectives. The ability to offer low deposit mortgages with the support of Genworth’s mortgage guarantee is a key enabler for the business.
“Our arrangement with Genworth has ensured we can offer a viable alternative to the Help to Buy scheme and this is demonstrated by our market leading 95% LTV two-year fixed rate mortgage at 4.89%.”
