Mortgage insurer puts up prices
According to research conducted by online lender MyRate, one in six people believe that lenders' mortgage insurance will cover their repayments if they become unemployed, but this is not the case. These insurance policies are designed to protect the lender if there is any reason that the borrower defaults on their loan, allowing them to claim for any outstanding loan amount that is not recovered through the sale of a repossessed home. Ian Graham, chief of PMI Mortgage Insurance, says that with the level of claims rising, the company has done some fine-tuning of its pricing so those with higher risk loans have to pay more. While PMI has not made any changes to pricing for insurance on standard loans or low-doc loans with valuations of less than 70 per cent, people with low-docs above this level have seen their premiums increase by 30 per cent.
Source: Sydney Morning Herald