Richard Roberts, head of property at The Route City Wealth Club, explained: “From a lending perspective, bringing back the MIG would help address many of the issues which are currently stagnating the market. Lenders are not offering high LTV mortgages both due to their lack of liquidity, and the risk factors involved in lending to those with low levels of deposit. However, the reintroduction of the MIG would theoretically allow lenders to re-insure against defaulting loans.
“In the 1990s, and until the housing boom began in the early 2000s, lenders placed the MIG on all products with an LTV of above 75%. So called ‘Riskier buyers’ paid it because they wanted a property – so the premium went with the borrower and the lender used this to reinsure themselves against default. We believe buyers would still be prepared to pay it today, in order to buy without huge deposits, which would massively stimulate the housing market.
“Although the reintroduction of the MIG would need to be addressed alongside other initiatives such as a reduction of stamp duty, it would provide the insurance policy for lenders that has been so clearly lacking in recent years, and would undoubtedly free up lending at high loan to values.”
