Nordea and If Insurance Offers “Job-loss Mortgage Insurance” to Mortgage Borrowers

Since April this year customers’ interest about housing loans has doubled, though, the potential borrowers are still very cautious. The main issue of concern outlined is “the fear of losing one’s job and thereby also regular income”. Nordea and If insurance have jointly developed a new service for mortgage borrowers – job-loss mortgage insurance, foreseeing insurance indemnity covering loan payments for a time period of up to six months in case the borrower would lose his job.

According to the results of the survey organized by Nordea  around 80% of the respondents admitted that the very thought of long term loan obligations makes them uneasy; the most frequently named substantiation thereof was „fear of losing job” (61%) and „uncertainty about the overall economic situation in the country” (46%). The majority of the respondents having loan obligations (72%) admitted that they would be ready to use the possibility of insuring against loss of job.

„Of course, the sharp twists and turns affecting the national economy have stirred doubts about the possibilities to take up long term loan obligations. Therefore, If insurance in collaboration with Nordea have developed a new service, that would protect households from cash flow problems in the event of loss of job”, told If insurance Head of Latvia Branch Andris Morozovs.

The „job-loss mortgage insurance” service means that in case of loss of job the insurer shall settle loan payments on behalf of the borrower for a time period of up to six months. The service is available both for customers that will execute new housing loan agreements and also those who already have a housing loan at Nordea. The costs of the „job-loss mortgage insurance” service are small and the monthly payment does not exceed 2% of the monthly loan payment. E.g. if the value of the house is 55 thousand euro, the annual insurance payment will be 60 euro, whereas in case of loss of job, the insurer would settle loan payments for the total amount of 1152 euro.

First Signs of Recovery in the Lending Market

„The activity in the mortgage loans market can be evaluated on the basis of two factors – the interest demonstrated by the potential customers and the actually concluded agreements. Increasing interest signalizes about the dominating general mood, feeling of stability and predictability, the signed agreements, on its turn, about the possibilities of the population to acquire housing. In the recent months both the interest of the potential customers about housing loans and also the number of concluded transactions have doubled. It seems that the lowest border is already behind and the situation of today can be compared with end 2008”, informed Nordea Member of the Board Jana Strogonova.

The number of phone calls with inquiries pertaining to housing loans received by the Nordea Contact Center in April and May has doubled and reached the level of end 2008. Besides, in comparison to the beginning of the year, the number of loans issued by Nordea in May is twice that high and housing loans have been granted to around 100 households already. All-in-all in the first five months of 2010 Nordea has issued almost 400 new loans for the total amount of 21.4 million lats, and the number of concluded loan agreements remains stable since the beginning of the year.