Mortgage insurance rate hike
QBE has raised the price of mortgage insurance by 9 per cent this year, citing the long-term risk of volatility in the Australian property market.
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The increase, which can add thousands to the cost of buying a home, comes despite falling mortgage defaults, as borrowers are cushioned by low interest rates.
Lenders' mortgage insurance protects banks against losses from soured home loans. Banks often require buyers to purchase a policy if they are borrowing more than 80 per cent of a property's value.
In a sign of the strong profits being made in the local industry, QBE said on Tuesday that its Australian LMI business had pushed through price rises of 9 per cent this year.
Chief executive John Neal explained the increase by saying QBE expected more volatility in the housing market in years to come.
"Our assumptions are not that there's going to be a housing price crash in Australia but ... certainly the next two to three years there's a little bit more volatility," he said.
In Australia, QBE and US company Genworth control about 75 per cent of the market for lenders' mortgage insurance.
Mr Neal said QBE's pricing was similar to that of Genworth - and it reflected long-term trends.
