Home News Mortgage insurance company prepares for a spike in home loan defaults

Mortgage insurance company prepares for a spike in home loan defaults

Font size :
Though Genworth Mortgage Insurance chief executive Georgette Nicholas believes that the risks of a property bubble have abated, the company is still preparing itself for a surge in home loan defaults in areas hard hit by the mining boom—particularly the regional areas of Queensland and Western Australia.

Nicholas agreed that the intervention from the prudential regulator last year has taken the excess heat out of the property market.

"Overall economic conditions are supportive, with record low interest rates and unemployment stable, and the fundamentals of the residential mortgage market are sound," Nicholas said. "In particular, there has been a significant decline in the proportion of high loan-to-value ratio (LVR) loans originated, given regulatory changes and changes in lender risk appetite."

The falling LVRs may have hurt Genworth's business as customers now need fewer lenders' mortgage insurance, but Nicholas perceives this to be a positive thing for the creation of a more stable market, hence reducing the company's capital requirements.

While Sydney and Melbourne remain to be strong markets, both Queensland and Western Australia are under pressure due to the end of the mining boom. This leads to the emergence of a "dual economy," leading Genworth to provision an extra $22 million this quarter for the slight uptick in the number of mortgages going bad in mining towns. House prices in these areas have already dropped by 25 to 30 per cent and are expected to fall further.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate

The sprawling redevelopment aims to boost the supply of affordable housing in Sydney Read more

A new suburb will be built in west Melbourne A new suburb will be built in west Melbourne Mount Atkinson will become home to more than 22,000 people over the next 15 years ... Read more

Surging house prices threaten liveability in Melbourne Surging house prices threaten liveability in Melbourne Analysts warn the city could become just as unaffordable as Sydney, if property trends continue ... Read more

More Aussies would benefit from regional hubs linked to cities More Aussies would benefit from regional hubs linked to cities Shorter commutes could spur higher home sales in regional towns, analysts say ... Read more

More mortgage news and articles

Sponsored Links

Friday, Aug 18, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords