Benefits of Mortgage Insurance

Mortgage insurance benefits residential lending activities in a number of significant ways:

Risk Transfer

As a third-party insurer, PMI removes a significant portion of the insured loan’s default risk from the lender’s book.

Regulatory Capital Relief

Under today’s regulatory regimes, PMI can help lenders reduce capital held against mortgages in most cases.

Looking forward, Basel II (Capital Requirements Directive) may introduce an environment where risks and regulatory capital will be better aligned and high loan-to-value lending will likely be more costly. PMI’s products can be an important part of lenders’ tools in minimising the capital assigned to this high-risk type of lending.

Funding Support

Whole Loan Sales: PMI credit enhancement can make pools of mortgages more liquid because of our approval and coverage.
Cash Securitisations: Primary or portfolio insurance from PMI will reduce required credit enhancement levels.
Covered Bonds: In some jurisdictions, it is possible to expand the loan-to-value of loans eligible for covered bond funding by the use of PMI’s products.

High Loan-to-Value Market Expansion

Mortgage insurance disperses the high loan-to-value risk, permitting lenders to increase their loan-to-value limits without adding more risk to their portfolio.

Availability of high loan-to-value loans expands homeownership and opens up new market segments for lenders.

Underwriting Review

High loan-to-value lending requires specialised underwriting expertise. PMI can offer 30 years of experience to help accurately evaluate these risks.