ces are on the rise in Canada, as much as 10%,
there’s good news for being able to afford your house. This news
would have a direct impact for home buyers that would fall into
the 80% to 100% purchase price for their homes.
What’s New For Mortgage Insurance?
Some people are in the situation that they can’t put 25% down,
and are required to pay thousands of dollars in mortgage life
insurance. According to the mortgage broker firm Invis, people
in this position accounted for 42% of the market at the end of
September.
In a research note to its brokers Invis has tracked the impact
of competition and risk-based pricing on mortgage where the
customer borrow 100% of the price of a home. Some of the
changes Invis noted for people who take a high ratio insured
mortgage are:
Mortgage insurance is mandatory is you have a down payment of
less than 20%.
For people who borrow 100% of the cost of their home, insurers
are now now factoring in the borrower’s credit score in a way
that can lower this cost of coverage. This is called risk-based
pricing, and it’s the way that almost all insurance works.
This use of risk-based pricing is the result of increasing
competition in the mortgage insurance business. Where there
used to be only to players in the field, the federal
government’s Canada Mortgage and Housing Corp, and Genworth
Financial, there are new players as well.
How Does This Change Buying Mortgage Insurance?
When Genworth announced that is would allow buyers to borrow up
to 95% to 100% of their mortgage at 3.75%, a new mortgage
insurance company called AIG United Guaranty said it would
offer the same coverage for 3.70%.
Could this trend in rewarding responsible borrowers become more
prevalent in the mortgage insurance business? Short of a retreat
in house prices, the best bet for improved affordability for
home buyers would seem to be further competition between
mortgage insurers.
About The Author: Ivon T. Hughes of the Hughes Trustco Group is
a licensed Insurance Broker. Author of The Life Insurance
Handbook. Get a FREE Copy TODAY! Email info@trustco.ca Web:
http://www.hughestrustco.com
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid=108795
==================