Mortgage insurance market heating up

National Post-  Mortgage default insurance is something you have to pay if you can’t come up with a 20% down payment on your house.

You pay the premium and the insurance covers the bank in the rare event — defaults in this country are still below 1% — you don’t make your mortgage payments. But it is a transaction between your bank and your mortgage insurer.

So, why should you care about the mortgage default insurance market and another new entrant into the market…?

Mortgage insurance market heating up

Battle of the heavyweights looms

The Vancouver Sun- The $2.5-billion mortgage default insurance market is about to see a heavyweight battle, as one of the country’s largest pension funds gets set to take on Crown Corp., Canada Mortgage and Housing Corp.’s dominance.

The Ontario Teachers’ Pension Plan finalized plans Friday to partner up with National Guaranty Holdings Inc. to buy American International Group’s Canadian operations. AIG been operating under the name AIG United Guaranty Mortgage Insurance Co.

AIG United was estimated to have grabbed 5% of the market in Canada but the financial troubles of its parent company dragged its operations down in Canada to the point that some industry analysts had suggested it might have even less than 1% of the market…

Battle of the heavyweights looms

Loophole may help banks to lend to first-time buyers

Financial Post- There is a small loophole in the new federal mortgage rules that could make it easier for the banks to lend out money to first-time buyers.

The federal government announced last month new requirements for anyone borrowing money for a house and needing mortgage insurance. If you have less than a 20% down payment and are borrowing from a financial institution covered by the Bank Act, you have to take out mortgage default insurance, which ensures the banks are covered for any losses resulting from payment defaults.

For principal residences, the new rules force consumers to qualify for a loan based on being able to make payments on a five-year fixed-rate mortgage, which has a much higher interest rate than variable mortgages, now as low 1.85%…

Loophole may help banks to lend to first-time buyers

It’s not the mortgages, it’s the borrowers

The Globe and Mail- Mortgage rates remain close to historical lows, but the cost of buying a house at the end of 2009 was up about 19 per cent from what it was at the end of 2008, with an average price of $332,461.

At first glance, the $16,623 required for the minimum 5-per-cent down payment doesn’t sound too steep. But mortgage default insurance would add close to $8,700. Add closing costs and moving costs and you’re looking at $35,000 to get into an average-priced home with just 5 per cent down.

And then there are the extra costs of owning a home versus renting. Between upkeep, utility bills, property taxes and just buying stuff, you’re certain to have much higher expenses…

It’s not the mortgages, it’s the borrowers – The Globe and Mail

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