This is a headline won’t really get too many people excited but believe me when I say that some recent changes that have been announced by Mortgage Insurer Genworth are big.

To put this is perspective, once the LVR of a loan gets about a certain percentage, the lender will need to get a mortgage insurer to approve a loan. This is a topic that has already been covered on this website.

Because of this, lenders try to build their own policies around those of the mortgage insurer’s because there is no point in a lender going through the process of approving a loan only to have it declined by the mortgage insurer but sadly it still does work out this way and we have seen a few loans be approved by the lender only to be declined by the Mortgage Insurer.

So, in may ways, it is the mortgage insurer’s that influence what is happening in home loan lending rather than the lenders themselves so when Genworth announces that they are relaxing some of their policies, it is a sign that lending policies should start to ease a little in the future as well.

The changes have been introduced as a result of “confidence and stability returning to the Australian economy” and include:

• acceptance of regular overtime income will be increased from 50% to 100% providing that the overtime is ongoing and verified as a condition of employment;
• The minimum time between an original loan and a Top Up (Additional Loan) has been reduced from 6 months to 3 months;
• Allowing the add-back of business depreciation up to a total amount not exceeding 20% of business taxable income for debt servicing calculations; and
• In respect of investment loans, Genworth will now allow the add-back of deductible interest paid on all investment loans;

• Lender pays Mortgage Insurance Premium

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