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Mig will not aid FTBs unless FSA relaxes rules on capital

The Building Societies Association says mortgage indemnity insurance guarantees will not encourage lenders to lend at higher loan to value ratios unless the capital requirements for this type of lending are relaxed.

Insurance provider Genworth Financial said this week it has agreed to provide mortgage indemnity insurance for the building society collective Mutual One, whose members include Hanley Economic and Skipton building societies.

The announcement follows a meeting called by housing minister Grant Shapps with leading industry figures last week, where they debated whether Mig has a role in helping first-time buyers.

BSA head of mortgage policy Paul Broadhead says it is the capital requirements for high-LTV lending rather than the risk of default that discourages lenders.

He says: “Until the FSA gives concessions over capital where a lender has a Mig in place, there will not be the benefits to lenders that often get talked about because it does not make it any less expensive for them.”

Precise Mortgages managing director Alan Cleary says: “The more risky the loan, the more cap- ital you have to put down. The return on capital for a lender is significantly less at 95 per cent than it is at 50 per cent LTV. The insurance makes no difference, the issue is the return on capital.”


ABI revamps TPD definitions for CI cover

The Association of British Insurers has published new standard definitions for total permanent disability as part of its updated statement of best practice for critical-illness cover. The latest best practice statement follows lengthy industry consultation on how to rebrand TPD. The TPD clause within CI policies accounts for just 3 per cent of claims but, […]


Protests hit Barclays as it admits paying just £113m corporation tax

Anti-tax avoidance campaigners protested outside 50 Barclays branches at the weekend after the bank admitted it paid just 1 per cent of 2009 profits in UK corporation tax. Action group UK Uncut organised the protests after Barclays chief executive Bob Diamond revealed the bank paid £113m in UK corporation tax in 2009 on a group […]


Eviction notice

The total number of repossessions has remained low throughout the financial crisis and the numbers have been falling over the last 12 months. Recent figures from the Council of Mortgage Lenders show repossessions for the whole of 2010 were 24 per cent lower than in 2009. A total of 36,300 homes were repossessed last year, […]

Woolnough: Corporate bond supply to dry up

M&G corporate bond fund manager Richard Woolnough predicts a shortage in the supply of corporate bonds in the next two years. He said the past two years saw a strong supply of corporate bonds but, with many now completing their financing, that supply is set to dwindle. He said there will only be a small […]

Sticking to valuation discipline when investing in China

Journalist Alexis Xydias discusses the opportunities – and potential pitfalls – of investing in China with Artemis fund manager Peter Saacke. With Peter holding significant positions in China in the Artemis funds he manages, journalist Alexis Xydias quizzes Peter on the risks of investing in Chinese stocks – including over-valuations, margin trading and financial reporting issues. Click here for video


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