The Staffordshire-based regional lender has utilised private mortgage insurance from Genworth for a number of years and will continue to do so in order to remain active and competitive in the 80%-plus LTV product range. It recently launched a new 95% LTV product which 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 rather than the ‘one size fits all’ taxpayer-funded guarantee.
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.
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. 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, and they will be utilising a tried and tested claims process built with the experience of over 20 years in the European marketplace.
Given the greater level of competition and product choice anticipated in the higher LTV lending bracket as a result of HTB2, Genworth is urging all lenders who have plans to continue operating in this space to review both the Government option and make the comparison with its own private arrangements which could provide a far more suitable fit than the State scheme.
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, commented:
“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%.”
