Mortgage Insurance

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Mortgage Insurance is Must

Don’t think you can manage without mortgage insurance because you think the state will step in and help you if you can’t pay your bills. If you’ve got a joint mortgage and one of you is still in work then you probably won’t get any state help, for example. Benefits will also be refused if you have more than £8,000 in savings and even if you do qualify you won’t get anything until you have been unemployed for 9 months. Mortgage insurance can seem to add a lot to your monthly bills. But if you lose your job or are forced out of work by illness or injury then it can seem like one of the most valuable policies around.

Mortgage Insurances

Over the past ten years the European mortgage rate has been good with rising house prices and low interest rates, this has made mortgages more affordable and has helped the European mortgage market double in size over the past ten years.

The interest rate has now increased and the housing market is stabilising but the demand for housing across Europe is expected to continue meaning mortgage credit is also likely to grow.

A study in 2005 found the area with the most future growth would be the high loan to value sector. Many European areas have not got into ‘high loan to value’ as the risk is considered too high. In these countries borrowers have to provide a deposit of around 20% or obtain guarantors. Because the demand for housing is likely to continue and house prices are still rising, people are struggling to afford property. The lenders will have to find ways of funding without putting themselves at greater risk.

Under the new Capital Requirements Directive (CRD) products such as Mortgage Insurance will be recognised allowing for a reduction in Capital requirements. Mortgage Insurance is important especially to first time buyer’s, as it will mean they will be able to buy property sooner. They won’t have the worry of funding large deposits or having to rely on parental support.

MI will provide a reliable means of transferring credit risks to the insurance sector and will cover their losses if borrowers default and the properties will not cover the debts and expenses.

MI can increase borrowers access into high loan to value mortgages especially in countries that have not participated before.

There will be a need to refine and regulate the market and needs of the industry plus those of the European mortgage markets.

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