Genworth      Print Page    Close Window

Press Release



New Genworth Mortgage Solution Features Affordable Payments Secure from Interest Rate Hikes

RALEIGH, N.C., Sept. 26 /PRNewswire-FirstCall/ -- Genworth Mortgage Insurance today announced the launch of a new, safer alternative to today's interest only loans -- Genworth IO 40.

Different from other interest-only (IO) and exotic mortgage products that feature short-term, adjustable rate mortgages (ARMS), the IO 40 mortgage solution allows lenders to offer an insured 40-year mortgage with interest- only payments for the first 10 years. The loan amortizes over the following 30 years, minimizing the payment bump when the loan begins amortizing.

The low initial monthly payment provided by IO 40 will assist homebuyers struggling to buy a home in today's high-priced housing markets. And the 10- year IO term will provide payment stability as buyers build their financial foundations.

"This new product provides a great combination of low down-payment and low monthly payment in a safe, stable manner," said Kevin Schneider, president of Genworth's U.S. mortgage insurance business. "IO 40 embodies our goal of providing products that not only help get people into their first home, but keep them there."

The popularity of mortgages offering a short-term "interest-only" period on payments has soared in recent years, as consumers seek affordable mortgage options in high-cost housing markets. In California alone, over 61% of last year's mortgage loans were interest-only.

While offering low initial payments, today's IO mortgages have one problem. When the interest-only period ends and converts to principal plus interest for the remainder of the loan period, monthly payments increase steeply. This can be magnified if interest rates rise. By offering a longer amortization period (30 years vs. 20), IO 40 substantially reduces "payment shock" when the interest-only period ends.

Available on loans up to 100% loan-to-value (LTV), IO 40 provides a strong tool for lenders seeking affordable housing solutions. With this new product, borrowers know what their payments will be today and what they will become when amortization begins after 10 years. Compare the difference in today's IO and new IO 40 for a $417,000 loan:

                               Today's IO      IO 40
    Interest Rate               6.375%         6.375%
    Payment (Mos 1-120)         $2215          $2215
    Payments (Mos 121-payoff)   $3123          $2627
    Payment Increase            41%            19%

Raleigh-based Genworth Mortgage Insurance is part of Genworth Financial, Inc. (NYSE: GNW)

About Genworth Financial

Genworth Financial, Inc. (NYSE: GNW) is a leading, U.S.-based insurance holding company, with growing international scope, serving the lifestyle protection, retirement income, investment and mortgage insurance needs of more than 15 million customers in 24 countries. For more information, visit http://www.genworth.com.

SOURCE Genworth Financial, Inc.

CONTACT: Terry Souers, Vice President, Public Relations, of Genworth Mortgage Insurance,
+1-919-846-4459,
terry.souers@genworth.com