Lenders’ mortgage insuranceLenders’ mortgage insurance

Lenders’ mortgage insurance

1. An ADI may reduce its capital requirement through the application of LMI, where the insurance:
   1. provides cover for all losses up to at least 40 per cent of the higher of the original loan amount and outstanding loan amount; and
   2. is provided by an eligible lenders’ mortgage insurer, which means that:
      1. for the purposes of Level 1 Regulatory Capital, the lenders’ mortgage insurer must be regulated by APRA; and
      2. for the purposes of Level 2 Regulatory Capital, in the case of overseas subsidiaries of Australian ADIs, the lenders’ mortgage insurer is regulated by an overseas prudential regulator.