Hanley Economic Building Society says private insurance is a superior way of funding 95% LTV mortgages than the "one-size-fits-all taxpayer-funded guarantee" offered by Help to Buy 2.
The Staffordshire-based regional lender recently undercut Help to Buy rates from big lenders such as RBS/NatWest and Halifax by launching a new two-year fixed rate priced at 4.89% to 31 December 2015.
It said using private mortgage insurance from Genworth has allowed it to remain active and competitive in the 80%-plus LTV product range.
Genworth recently outlined its private alternative to the Government’s HTB mortgage guarantee which offers lenders a bespoke arrangement tailored rather than what it calls the "one-size-fits-all taxpayer-funded guarantee".
It said private insurance offers a number of advantages to lenders looking to develop prudent high-LTV lending.
The private option protects the lender from "potential reputational issues" if things went wrong with the taxpayer-supported guarantee under Help to Buy 2.
It also allows lenders to choose both bespoke cover and premium options, and gives them access to a bespoke administration and operation process.
Lenders can use also Genworth’s referral process to obtain cover for loans which are deemed good risk but do not meet all aspects of the set criteria.
It is urging lenders who plan to offer high-LTV mortgages through Help to Buy 2 to examine the private alternative as well.
Simon Crone, vice president, commercial mortgage insurance Europe, at Genworth, said: We are committed to the UK residential lending market and are able to provide stability and certainty to lenders far beyond the expected three-year term of Help to Buy 2.
“Many lenders have pinpointed their intention to continue working in this vein in order to be free of government intervention in their higher lending activities and to ensure they do not have to seek support from the taxpayer at any point.
“We believe there is plenty of scope for societies and lenders to determine their own risk appetite in the higher-LTV marketplace rather than have it dictated to them.
"They can do this by using private mortgage insurance from providers such as ourselves which will offer many benefits including bespoke arrangements, less reputational risk and all the administration and operational advantages we can deliver.”
David Webster, chief executive at Hanley Economic Building Society, added: “Our arrangement with Genworth has ensured we can offer a viable alternative to the Help to Buy scheme and this is demonstrated by our market leading 95% LTV Two-Year Fixed Rate mortgage at 4.89%.
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