The concept of mortgage insurance: the discussion

The Bank of Russia on discussions with the professional community finalized the concept of mortgage insurance.

The concept assumes that the Bank issuing the mortgage, insures the acquired property, life and health of the borrower. Such insurance will be mandatory and its amount will be reflected in the total cost of credit. Now insurance is acquired by the borrower, and the agent is often a Bank, leaving himself usedonmost of the insurance premium.

The new approach will increase the transparency of the mortgage transaction, will make it easier for citizens comparison of mortgage products from different banks and, moreover, will help to reduce the cost of mortgages.

Assessment of the Bank of Russia show that, if proposed in the concept approach has been now, the full mortgage cost in 2019 would be lower by about 0.15 to 0.67 percentage points.

In the final version of the concept specified minimum list of insured risks, and also found that securitization of mortgage loans, the insurance contract must sign the mortgage agent. The document also recorded that the provisions of the concept does not apply to previously signed mortgage loans, however, apply in the case of refinancing mortgage.

The Bank of Russia has scheduled a meeting with market participants to clarify the provisions of the concept.

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