27 Feb

Government urged to reintroduce MIGs

Government urged to reintroduce MIGs

The government has been urged to bring back a form of mortgage indemnity guarantee (MIG) as a means of overcoming risk aversion among lenders.

In a letter to chancellor of the exchequer Alistair Darling, finance director of Team Association Phil Irving reminded the chancellor that MIGs were a common feature of the mortgage market.

He recalled that these were used by building societies to protect themselves against risk in the days before the wave of de-mutualisations and the 1990s recession.

Mr Irving noted that buyers had to purchase a MIG if they had deposits of less than 25 per cent, which would enable lenders to claim for any shortfall in mortgage debt in the event of a default.

Reflecting on the current "aversion" shown by lenders towards risk, he commented that the company and the agents it represents "are firmly of the opinion that an updated version of the MIG system could successfully tackle this very issue".

Yesterday Nationwide's chief economist, Fionnuala Earley, said an injection of confidence in the housing market could "flow through quickly" into an increase in sales.
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