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First Mortgage Direct Ltd

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First Mortgage Proposes Solution

With the UK housing market being hit hard by the credit crunch, a new idea is being proposed to help kick start the market back to life.

Edinburgh, United Kingdom, December 24, 2008 --( The UK housing market has the largest percentage of homeownership than any other country in the world, and currently, with the market stalling due to the credit crunch, mortgage advisors such as First Mortgage are proactively seeking solutions to the housing crisis.

The market depends upon first time buyers to fuel activity from the bottom up and whilst first time buyer appetite to purchase property remains strong, their ability to obtain high loan to value mortgages has been removed as lenders struggle to obtain Indemnity Guarantee Insurance, which provides lenders with the ability to lend beyond 85% of the property value.

First Time Buyers are having to find, on average, a 15% deposit to purchase a home, which is causing the market to stall. First Mortgage are confident that increased availability of loans for buyers will lead to a recovery in the housing market and stop further house price adjustments throughout 2009.

A new proposal has been put forward that can boost activity through simple but effective changes to the Indemnity Guarantee Insurance system, which provides lenders with the ability to lend beyond 85% of the property value.

Indemnity Guarantee Insurance (IGI) is taken out by lenders when mortgage applicants require a high loan to value mortgage 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.

“The proposal to change the system is very straightforward and makes excellent common sense,” comments Ian McGrail of First Mortgage. “If the Government provides a National Guarantee Insurance scheme for high loan to value loans up to 100%, then there would be no cost to the tax payer involving huge cash injections to lenders. With lenders being protected on the top 15% by way of a government guarantee to meet any shortfalls it would allow for the re-introduction of loans up to 100% of the property value. As only 2% of properties are under threat of repossession at any one time, the risk to the indemnity company is sufficiently low, however in the current climate commercial insurers remain nervous therefore this guarantee is essential for the re-introduction of high loan to value mortgages.”

Premiums collected by the Government should cover all or most of the claims that can be accurately anticipated from the outset. By kick starting activity in the first time buyers market the boost this would give would quickly filter up the housing chain. In addition, being Government bonded, the market and interbank lending is assured absolute confidence, rather than the IGIs being offered by commercial organisations who themselves are at high risk of failure.”

First Mortgage is committed to improving the way that house buyer operates in order to gain the best deal for the home buyer. By backing this new system of Indemnity Guarantee Insurances, the company is demonstrating its responsibility to the first time mortgage buying market and the importance of accepting new practice that will bring renewed optimism to a currently depressed marketplace.


Contact Further Info: Ian McGrail, 0131 476 7025, mobile 07894 097887,

Notes for Editors:
About First Mortgage:
First Mortgage are impartial fee free UK mortgage brokers
First Mortgage has branches in Edinburgh, Dundee, Aberdeen and Falkirk
First Mortgage are pioneering new thinking in mortgage markets with products like 'green mortgages', energy saving packs and family equity loan plans
First Mortgage is an 11 year old family owned business
Contact Information
First Mortgage Direct Ltd
Ian McGrail
0131 476 7025

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