In its results released last week, Genworth revealed it had recently bought a minority stake in OSQO, intending to work with the fintech on a new deposit gap funding product for home buyers.
OSQO has presented itself as an alternative option to lenders’ mortgage insurance (LMI) for home buyers struggling to save the full deposit.
The fintech is developing an offering marketed as lending first home buyers the amount they need to make up their 20 per cent property deposit, backed by crowdsourced funding from friends, family and other private investors on the platform.
Borrowers will pay investors the same interest rate as their mortgage plus a pro-rata share of the capital growth, once the property value has grown enough to refinance at 80 per cent and pay out the OSQO loan.
Investors will supposedly be paid quarterly, while borrowers will need to give OSQO interest payments monthly.
The fintech will reportedly alert borrowers when they should have enough equity to refinance and to pay out the OSQO loan.
OSQO has claimed its fees will be lower than the cost of LMI, saying it will charge 1.95 per cent of the value of the deposit gap loan.
In December, Genworth also launched its Family Home Assistance product, which allowed home buyer’s family members to fund the cost of LMI and pay upfront at the time of loan settlement, for a 15 per cent reduction on the LMI premium paid by the lender.
Together with the OSQO investment, and improved broker and borrower engagement tools, Genworth expects it will boost its customer proposition and improve its market positioning.
The company reported a statutory net profit after tax of $192.8 million for the 2021 year, a strong contrast from its $107.6 million loss during the 2020 full year.
“Momentum is growing in the business as evidenced by our strong financial results, recent lender customer contract renewals and our resumption of capital management activities,” Genworth chief executive and managing director Pauline Blight-Johnston said.
“This positions us well to deliver on our vision to be the leading choice for flexible home ownership solutions.”
Genworth recently renewed its contract as the exclusive provider of LMI to CBA for another three years from 2023.