New data shows the number of lenders mortgage insurance (LMI) policies have risen by 25% in the last year:
Data from Digital Finance Analytics shows the number of LMI policies taken out in Australia rose by 25 per cent from 218,593 in 2019 to 273,473 in 2020.
More than 150,000 policies were taken out in the first six months of this year…
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Data shows that 70 per cent of people paying for it are first home buyers…
The two biggest external suppliers of LMI are insurance giant QBE and specialist provider Genworth.
Genworth confirmed to ABC News that it had seen a 15 per cent increase in policies being taken out in the last six months compared with the same time last year.
“This was driven by owner-occupiers and first home buyers that have taken advantage of the low interest rates to enter the housing market,” a spokesperson said.
The boom in LMI comes at the same time as borrowing from the ‘bank of mum & dad’ is also booming, according to DFA:
That said, the above data on LMI somewhat contradicts the latest mortgage risk statistics from APRA, which shows that mortgages with a loan-to-value ratio (LVR) above 90% actually fell over the June quarter:
This suggests that there’s a lot of borrowers taking-out mortgages between 80% and 90% LVR, which still require LMI but are a bit less risky.