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Migs are an&#39unnecessary evil&#39

National mortgage broker Savills Private Finance is calling for

lenders to abolish mortgage indemnity guarantees, saying they are no

longer needed with arrears and repossessions at an all-time low.

It says the latest figures from the Council of Mortgage Lenders

published last month support this view that Migs, a premium paid by a

borrower to provide the lender with insurance should they default on

their payments, is an “unnecessary evil”.

The payment protects only the lender not the borrower and Savills

argues with only 0.11 per cent of all mortgages having to be

repossessed last year such insurance is no longer required.

It says that in today&#39s markets, Migs do not have a place and

borrowers would be better placed seeking specialist advice to ensure

they know of all the insurance options to cover their own mortgage

repayment risks.

Savills has compiled a list of all lenders charging Migs and the

level of loan to value where these are compulsory.

It says the list contains some of the UK biggest lenders, including

Abbey Nat-ional, Alliance & Leicester,Halifax and Woolwich.

Lenders that do not levy a Mig include Legal & General Bank,

Intelligent Finance, Nationwide and Northern Rock.

Savilla director Mark Harris says: “The statistics from CML back up

our calls for the abolition of Migs. With defaults on loans

significantly lower than they were when Migs were first introduced,

due to current levels of affordability, low unemployment and the

resilience of the housing market, we believe it is an unnecessary

evil.”

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