LMI providers exercise caution
Three providers of lender's mortgage insurance in Australia, PMI, Genworth and newly licenced MGIC, are expected to reign in aggressive growth targets. Genworth is believed to be planning to limit, and even completely stop, selling insurance on mortgages in certain postcodes, mainly in south-west Sydney. PMI has not announced any changes yet but its parent company in the US is experiencing larger claims and a default rate of 0.29 per cent, up from 0.16 per cent just a year ago. A sign that MGIC has not escaped the US sub-prime crisis is the scrapping of its planned takeover of Radain Group. While early signs are for a change of attitude to locations that have been hurting for years and only for non-bank lenders the expectation is that they will seek to reduce risk even further.