Fresh from its expansion into the mortgage insurance business, QBE Insurance Group, one of Australia's largest insurers, plans to push into Hong Kong where it will compete with the Hong Kong Mortgage Corp (HKMC). The move comes more than a year after QBE acquired the Australian and New Zealand units of the United States-based PMI Group. It also bought Hong Kong-based PMI Mortgage Insurance Asia. QBE Mortgage Insurance (Asia), formerly known as PMI Mortgage Insurance Asia, would offer flexible and adaptable products to attract lenders, said Ian Graham, the chairman of QBE Lenders' Mortgage, formerly PMI Australia. The Hong Kong market is dominated by the HKMC, with 90 per cent of the business. It is wholly owned by the government through the Exchange Fund. QBE Mortgage would be an alternative option for banks, giving them confidence to lend through economic cycles, Graham said. 'We certainly see the opportunities to provide lenders with some choices,' he said. 'Speed of service by giving insurance approval to lenders is an option.' Through PMI Mortgage, the company had acted as reinsurer for the HKMC's mortgage insurance programme, said Jonathan Chan, the managing director of QBE Mortgage. Recently, the company formed a partnership with Standard Chartered Bank (Hong Kong). 'Our partnership with Standard Chartered marks our first lender-direct business in Hong Kong. We intend to bring on additional staff and resources as we anticipate our business will grow in the next 12 months,' said Chan. We will also work with our partners to further expand our product offerings to assist their customers to become homeowners. Commenting on the warning by the Hong Kong Monetary Authority, the banking watchdog, of default risks in a property market correction, Graham said such concerns would give mortgage insurers more business opportunities as they would lower bankers' risk. Last week, the monetary authority told banks that their pricing framework needed to include a 'reference level' that took into account their capital, credit costs, expenses, incentives for customers and delinquency assumptions. The warning came after banking giant HSBC last month launched the city's lowest mortgage rate - at a 0.65 percentage point premium to the one-month Hong Kong interbank offered rate. Meanwhile, QBE's expansion plan has triggered calls on the HKMC from some private mortgage insurance providers to cut its dominance of the market and make room for more genuine competition from smaller, locally based players in the sector. 'I believe there is room for more private-sector participants in the mortgage insurance market for Hong Kong. When the quasi-government entity [HKMC] has over 90 per cent of the market share, something is not right,' said Leland Sun, the chairman of financial services company Pan Asian Mortgage, which specialises in mortgage origination and capital market financing. 'With more competition, borrowers will undoubtedly have more choices. At some point, when there is sufficient private-sector participation (when the private sector can more than adequately meet demand), the government should determine when it would be appropriate to disengage from competing with the private sector,' he said. At present, the HKMC allows private participation. Since 2008, the HKMC has been able to link with private mortgage insurers to offer mortgage insurance schemes, allowing both homebuyers and their lenders to feel more secure.