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Major bank dumps LMI agreement

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Julia Corderoy | 19 Feb 2015, 07:00 AM Agree 0
A leading LMI provider is set to suffer a 14% decline in gross written premiums after a major bank terminated its agreement with the insurer
  • Coast Broker | 19 Feb 2015, 10:19 AM Agree 0
    An interesting move from Westpac. So are they looking at reducing the max LVR on their products? Also will this effect St George with Westpac owning them?
  • Vic Regional Broker | 19 Feb 2015, 03:40 PM Agree 0
    Hard to see them not insuring over 90% or even 80% if they intend to securitise some of the loans that fall into that category.

    They may even use a new to Australia insurer which would be great for competition in that market segment.

    Really the LMI Insurers have had a duopoly for too long !!!
  • Michael Kent | 20 Feb 2015, 09:04 AM Agree 0
    I wouldn't jump to conclusions yet. Surely they (Westpac) would lose a truck load of business if they capped loans at 80 even 90%.

    I read this morning they are dumping both Genworth AND QBE and have an exclusive deal with an insurer in Bermuda???

    Who knows, it could mean they can go to 99%, lets hope!
  • Old Broker | 20 Feb 2015, 09:52 AM Agree 0
    Here is some trivia... LMI was introduced in 1965 so that Building Societies could compete with banks. Prior to that FHB were restricted to borrowing 66% of the value of the home and then had to borrow the remainder from the trading arm of the bank at relatively higher rates. But hang on ...wasn't HLIC LMI provider set up by the government to plug this gap... and isnt HLIC now sold...so why dont they just build another one...
  • illawarra broker | 20 Feb 2015, 10:23 AM Agree 0
    Maybe they would just have a better cost structure for the consumer Michael? That would be nice - impossible, but nice. Genworth is ripping most consumers a new one, and really, where is their risk? No 100% home loans anymore, yet LMI Premiums are still ridiculously expensive. Assessment rates have not REALLY dropped much, interest rates are at an all time low. Still, fees are no less for the consumer. I have said it for years - When I grow up, I want to be a mortgage insurer.
  • Michael Kent | 20 Feb 2015, 11:54 AM Agree 0
    100% agree with you Illawarra! LMI is a complete and utter rip off. Most as in 99% of borrowers are not in a position to pay it directly so it is added to the loan.

    I had one loan settle today the LMI was $39k. Lets say the client pays the loan off in 12 years how much has that $39k blown out to?

    I pray to god a new LMI provider comes in and A) has a more flexible policy and B) charges a lot less for the premium and creates some actual competition to the market.

    The fact there is only 2 LMI providers in this country is a joke. Imagine if there were only 2 home insurance or car insurance companies!
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