Document ID: chunk:federal_register_of_legislation:F2014L01824:body:0:p6
Version: federal_register_of_legislation:F2014L01824
Segment Type: other
Provision Reference: 
Character Range: 13763–16315

insured according to the following categories: LVR of less than 60.01, 60.01 to 70, 70.01 to 80, 80.01 to 85, 85.01 to 90, 90.01 to 95, 95.01 to 100, and greater than 100 per cent. Report the relevant category by selecting the appropriate lower and upper bound percentages in Columns 1 and 2.

(2)  LVR less than or equal to (%)

The Loan-to-Valuation Ratio (LVR) is the ratio of the amount of the loan to the value of the secured residential property, as at the date of origination of the loan. Where the mortgage insurance premium is capitalised in the loan amount, the LVR must be calculated including the premium; that is, the loan amount must be increased by the amount of the capitalised premium, irrespective of whether the premium is insured. The inclusion of a First Home Owners Grant in the deposit for a mortgaged property will not otherwise increase the LVR of a loan.

LMIs are required to report the sum insured according to the following categories: LVR of less than 60.01, 60.01 to 70, 70.01 to 80, 80.01 to 85, 85.01 to 90, 90.01 to 95, 95.01 to 100, and greater than 100 per cent. Report the relevant category by selecting the appropriate lower and upper bound percentages in Columns 1 and 2.

(3)  Coverage proportion (%)

This is the percentage of cover for which the insurance provides over the loan amount.

Select from the appropriate coverage proportion percentage: 20, 25, 30, 35, 40 or 100 per cent."

(4.1)      < 3 years

(4.2)      3 < 5 years

(4.3)      5 < 10 years

(4.4)      >= 10 years

Age is the length of time from the date of origination of the loan to the date of calculation for the purposes of determining the seasoning factors in Attachment A of GPS 116.

Report the sums insured for the LMI policies according to the following categories: age of less than three years, three to less than five years, five to less than 10 years, and more than 10 years.

(5)  Total sum insured

The sum insured is the original exposure amount for an LMI as stated in the mortgage insurance policy.

It is automatically calculated as the sum of Columns 4.1 to 4.4 multiplied by their corresponding seasoning factors.

(6)  PD factor

The probability of default (PD) is the risk of default by the borrower. It varies according to LVR as per Attachment A of GPS 116.

This is automatically determined from the LVR percentages in Columns 1 and 2.

(7)  LGD factor (100% cover)

Loss given default (LGD) is the loss to the LMI upon default by the borrower. It varies according to LVR as per Attachment A of GPS