Genworth, the provider of mortgage insurance products to lenders in the UK, has today outlined its private alternative to the Government's 'Help to Buy' mortgage guarantee.
The range of private mortgage insurance offered by Genworth for high loan-to-value (LTV) lending products offer a bespoke arrangement tailored to the individual needs of those lenders aiming to increase their high LTV lending prudently.
The news from the Prudential Regulatory Authority (PRA) that the capital treatment available to Government Help to Buy participants will also be available to private mortgage insurers with similar contractual terms means Genworth is able to offer a clear product alternative for lenders.
Genworth's range of private insurance products can provide many benefits and product features that are not available with the State guarantee. These include:
· Bespoke cover and premium options rather than 'one price fits all'.
· Single upfront premiums with no threat of retrospective increases in price.
· Greater certainty and stability on a term longer than one to three years, since the product offering is not limited by time or amount and not subject to changes in Govt policy priorities.
· The ability to go beyond a £600k house price limit and consider niche products.
· A bespoke administration process working with the lender to determine the data and reporting requirements.
· Claims and other processing managed in-house not by a third-party administrator new to the market.
· A delegated lending authority working with the lender's criteria and agreed audit requirements.
· The ability to refer to Genworth for individual underwriting , providing the lender with the opportunity to seek approval for a case that might not meet all the lending criteria yet is deemed a good risk.
· Added-value services as standard such as credit scoring, arrears management and risk reporting.
· Solutions on in-force as well as go-forward lending portfolios with only one initial set-up project.
· Claims submitted to a private company are not subject to 'bail out' reputational issues.
Genworth anticipates far greater competition in the high LTV lending market as a result of Government Help to Buy and is urging those lenders who are seeking a quality alternative to review the Genworth product offering. Genworth is the only global guarantor of mortgages, with decades of experience in the UK.
Simon Crone, Genworth vice-president, Commercial – Mortgage Insurance Europe at Genworth, added:
"While we support the concept of Government Help to Buy, it is vitally important that lenders and consumers have more than one option available to them. Our private alternative to 'Help to Buy' allows bespoke cover and more competitive conditions, particularly for the more prudent lenders, who would probably like to see their approach and performance recognised with differentiated terms and conditions.
"The Government's Help to Buy Scheme has created an expectation from consumers that all lenders will be offering more high LTV lending, and it will be critical this lending is prudent and protected, as the high LTV lending environment becomes more competitive, and as house prices potentially rise.
"This is where we see Genworth's private alternative to 'Help to Buy' co-existing and complementing the Government scheme and we believe the lending community will recognise the importance of having a competitive alternative available; one which can offer a bespoke administration process, in-house servicing and could even cover niche products sectors. Genworth is offering this via our private 'Help to Buy' products and we are confident our range will be able to support the high LTV needs of all lenders who are looking at their options in light of the launch of the Government's scheme."