Mortgage insurers with sound credit profiles should generally have stand-alone ratings limited to the single-A range, according to Moody’s Associate MD Stanislas Rouyer.

He says risks in the mortgage insurance business make very high stand-alone ratings hard to achieve.

Moody’s has proposed changes to its rating methodology for mortgage insurers and is seeking comment from the market.

But the proposal would probably not lead to rating changes for US mortgage insurers because their ratings dropped during the financial crisis.

However, Moody’s says Australian mortgage insurers’ ratings are under review for possible downgrade and would be better positioned in or close to the low single-A range – whether or not the revised methodology is adopted.

Under the proposal, analysts would continue to use a scorecard to evaluate factors affecting ratings, but scorecard metrics would be changed to better reflect mortgage insurers’ risks and exposure to housing cycles.

“The proposed methodology would allow us, in particular, to better reflect regional differences in our ratings and improve the consistency and comparability of rated mortgage insurers globally,” Mr Rouyer said.