PHILADELPHIA: A state or privately backed mortgage indemnity guarantee (MIG) would support high loan-to-value (LTV) borrowing in the long term.
This should then give lenders reassurance that this type of lending is low risk. As a result you could open up the market to a greater number of lenders who would invest in shared ownership. You would reduce current lenders’ exposure to risk on any one development, while offering greater competition leading to mutually beneficial rates.
We are seeing an increasing number of innovative lending products in the market coming from both existing niche lenders and new entrants. The shared ownership market is large enough that with the combination of attractive margins and a MIG in place we could expect to see some intelligent low risk lending in this sector…