The move comes in order to increase lending to first time buyers and follows guidelines issued by the Financial Services Authority (FSA) in 2010 regarding risk mitigation.
The FSA rules were put in place in a bid to provide greater consistency in the market and free up funds for young homebuyers.
Genworth’s mortgage indemnity insurance will allow Monmouthshire to increase the range of high LTV loans it offers, helping prevent the disenfranchisement of the next generation of homebuyers.
Colin Strong, head of lending at Monmouthshire Building Society, said insurance policies would increase costs for consumers, but allow smaller lenders to fill a gap in the market.
“The costs depend on the risk profile of the customer, because a high LTV will always be associated with higher costs anyway. It depends on the size of the lender, so smaller firms like us need to take this insurance to offset the risk where bigger lenders can absorb the risk.”
Patrick Bamford, part of the UK business development team at Genworth, added: “It’s important for borrowers and the UK economy that people can aspire and buy their own homes and for the past decade we’ve been at the forefront of encouraging wider access to home ownership.”
