The Prudential Regulatory Authority has confirmed that the capital treatment available to government Help to Buy participants will also be available to private mortgage insurers with similar contractual terms allowing an alternative product to be offered to lenders.
Simon Crone, Genworth vice-president, commercial – mortgage insurance Europe at Genworth, said: “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.”
Private mortgage insurance has the ability to go beyond a £600k house price limit and will consider niche products, which the government’s guarantee will not stretch to.
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 its product offering.
Crone said: “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.”
And he added: “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.”
