Mortgage insurance coverage for new loans suspended for high risk coronavirus workers

Lenders Mortgage Insurance (LMI) has been suspended by insurance company QBE for new loans taken out by home buyers who work in industries that have been hit the hardest by the coronavirus crisis.

QBE have started notifying home loan lenders of the decision to suspend the coverage.

QBE have defended the decision, arguing that lenders would be inclined to curtail home lending in response to the pandemic.

“We expect responsible lending obligations would have put a stop to much of the lending to those impacted by the COVID-19 crisis,” a QBE spokesperson told Banking Day. 

“The temporary embargo was issued to all of our lenders.” 

ASX-listed bank Auswide had sent a note to mortgage brokers on Monday regarding the LMI suspension.

“Mortgage insurers yesterday (Sunday) advised that in response to what is a rapidly changing environment they are imposing a temporary embargo on applicants working in the industries most directly impacted by COVID-19,” Auswide told brokers.

“Effective immediately a temporary embargo is in place on all new applications received for applicants working in the industries directly impacted by COVID-19, for example those working in gymnasiums, beauty salons, tourism and hospitality industries.

“Exceptions may be considered by the mortgage insurers on a case by case basis.”