The United Guaranty (UG) Corp -- a subsidiary of AIG Corp -- will soon ink agreements with local banks to launch home-mortgage insurance in Taiwan, the head of the Financial Supervisory Commission said yesterday.
"Such insurance products will help lower risk for lenders in the local home-mortgage market," the commission's chairman Kong Jaw-sheng (龔照勝) said yesterday.
Taiwan is the only Asian country where UG has launched its direct-banking home-mortgage insurance services, he said.
"[The planned product] represents UG's recognition of the local home-mortgage market," Lee Shyan-yuan (李賢源), a commission member, said at the press conference.
With the insurance, small lenders with good credit in Taiwan will be able to raise their home mortgage credit, Lee added.
Lee also said it will be beneficial to the nation's property securitization market and bond market since 50 percent of UG's premiums will be reserved for fix-income investments, which may potentially inject capital into the local bond markets.
According to UG, mortgage insurance is a quicker, simpler and more flexible way for home buyers to get a low down-payment loan.
With a credit guarantee from the insurer, a home buyer will be able to put down less than 20 percent on a home, although lenders, which will have to pay premiums, will also charge higher costs.