Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

Question 116: To ask the Minister for Finance his views on the role that mortgage indemnity insurance can play in the future housing market; his further views on whether it can assist in reducing risk and exposure for high loan-to-value lending; and if he will make a statement on the matter. [29252/10]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

Question 125: To ask the Minister for Finance his views on the wider use of credit risk mitigants, such as mortgage indemnity insurance, as a mandatory requirement for the underwriting of high loan-to-value loans in the context of new regulatory requirements for future mortgage lending; if his attention has been drawn to the positive and constructive impact of mortgage indemnity insurance in other jurisdictions in terms of reducing both the capital risk arising from negative equity and the consequent exposure for customers; the steps he is taking to investigate the potential benefits of mortgage indemnity insurance in the context of preparing a prudent regulatory structure for the future mortgage. [29251/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 116 and 125 together.

Mortgage indemnity insurance products allow lenders to reduce their exposure in the event of a default. They provide protection, typically, to the lender and not the borrower. As against this, they would reduce the systemic risk of high loan to value loans. Like other insurance products, they have a premium so making such insurance mandatory imposes an additional cost which is likely to ultimately fall on the borrower. I would expect that the role of such credit risk mitigants in the mortgage market going forward will be considered by the Expert Group on Mortgage Arrears and Personal Debt in the next phase of their work.