Australia’s largest mortgage insurer, Genworth, says it will raise prices on Lenders Mortgage Insurance (LMI) by 20% this quarter on increased risk due to rising unemployment.
“There is economic uncertainty and unemployment is expected to rise and with that one expects to see some increases in people not being able to pay their mortgage – that’s the spectre on the horizon” said Genworth’s chief executive Martin Barter.
In July, Mr Baker reported due to lower interest rates, only 17% off borrowers struggled to meet their mortgage repayments in the last 12 month down from 23% recorded in the year prior. “But the real concern is unemployment,” “The trend shows that small increases in unemployment can quickly translate into repayment difficulties for home owners.” said Mr Baker.
All eyes will be on the ABS tomorrow when they release July 2009 Labour Force figures. Economists are expecting the unemployment rate to rise to 6%.
» Genworth hikes LMI prices by 20pc – Mortgage Business, Tuesday 4th August 2009
» Mortgage stress down, jobs stress up – news.com.au, July 22nd 2009.
Work colleague of mine just bought his first unit/home.
Good for him………I guess.
His deposit??? A massive $3,000…..Yes, three thousand dollars…..Less than three weeks income for an average Aussie.
Funded though Homestart, South Aussie Govt rubbish.
Seriously housing is a sick, sick joke in this country.
Genworth, if your reading this, 20% will hardly be enough if a hiccup is ever allowed to occur.
And what’s the real unemployment rate?
(In the US it would be called U6, don’t know what it’s called here.)
Is there a ‘shadowstats’ equivalent in this country?
Hi, sorry this is a very late response. Do you think Genworth is the equivalent of AIG for the Australian market? They seem to be the people on the hook for the first 20% of loan losses. Are they well capitalised? Surely if the mortgage insurance companies are starting to see significant risks here, they might become less willing to fund high loan to valuation ratios. If that happens, I hate to think of the blood on the floor for the housing market.
I’ll try to find out the answers myself, but I’d be most interested in someone else’s opinion other than my self-taught analysis. After all, I was almost a first home buyer myself two years ago. There but for the grace of God……