You are here: Home - News -

Lender calls for industry-wide review of MIG usage

by:
  • 05/09/2002
  • 0
MIG fees are adding to the afforability crisis, claims Future Mortgages

Future Mortgages has called for the industry to review its use of mortgage indemnity guarantees (MIG).

It warned that MIG can add thousands of pounds to the cost of a mortgage, financially stretching borrowers while they receive no benefit from the policy.

Brian Pitt, sales and marketing director of lender Future Mortgages, said: ‘With house prices nearly 20% higher than this time last year, there is a serious affordability issue to be addressed.

‘Customers attempting to enter the housing market may have a healthy deposit amount, but with spiralling house prices the relative value of their deposit is much lower. As a result, more first-time buyers are falling into higher loan-to-value bands and are facing additional MIG payments.’

He added: ‘It has long been argued that it is inappropriate for borrowers to pay for an insurance that does not offer them any protection. With all the recent talk of mortgage regulation it seems prescient to call upon the industry to review its use of MIG as well.’

Steve Hoare, managing director at mortgage network HomeLoan Partnership, agreed: ‘I am not convinced lenders need MIGs at the moment, even a small deposit involves quite a lot of equity with prices where they are now. A number of lenders are lending on affordability, looking at basic income not multiples, they are stretching income multiples and want to secure the loan, so they can’t lose out.

‘MIG is becoming rarer, but it will sit on the back burner as an option for many lenders if it looks like house prices might drop and negative equity raises its ugly head again.


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Government building homes for cash-strapped key workers

Government aims to meet rising demand for affordable property by injecting £1.4bn into new homes

Close