Simon Crone, Genworth Financial Europe mortgage insurance vice president, says the practice of sharing risk between mortgage lenders and either private insurers or the State improves lending standards and provides another supervisory body to keep an eye on banks’ lending practices.
Rather than exacerbating the current supply shortage, he argues that mortgage insurance will lead to an increase in housing supply.
“Ireland definitely needs more supply of housing and it needs the right supply of housing in the right place but home builders aren’t going to invest... unless they know that there will be buyers [for] those properties down the line,” he said.
A state-backed mortgage insurance scheme has been mooted, but Mr Crone believes the provision of such financial services is best left to the private sector.
“There’s no need for the Government to take further housing risk in the market where there’s a private sector that’s willing and able to do that in the current climate.
“I’m sure the troika and others would probably frown upon the Government taking housing sector risk at a time when there are alternative solutions available with companies such as ours and others in the market,” Mr Crone said.
While accepting that providing greater levels of credit could “in some distinct locations” fuel price hikes, he said it would contribute heavily to a sustainable market in the long term as supply increases in line with greater optimism among construction firms.
Last week, Savills director of research John McCartney warned that a mortgage insurance scheme would give buyers more money with which to bid for a limited stock of housing, creating the risk of re-inflating a housing bubble.