First Mortgage has put forward a solution that it believes can boost activity in the housing market. It believes that through simple changes to the Indemnity Guarantee Insurance system is what is needed.
Indemnity Guarantee Insurance (IGI) is taken out by lenders when mortgage applicants require a high loan to value mortgage – usually around 85% – to insure the risk of the mortgage holder not being able to make repayments. In the event of repossession, any shortfall from a forced sale is made up through the IGI. Currently this cover is offered by independent Insurance Guarantee Insurers, many of whom are not able to provide the cover because of the problems of assessing high risk in the current market.