Many homeowners are still failing to take out mortgage payment protection, according to the latest research from Halifax, writes Adele Burton. In the first quarter of 2002, 75% of new borrowers did not take out any protection.
Spokesperson for the Halifax, Mark Hemmingway, believes this is worrying considering unemployment levels could rise in the future. Figures from the Office of National Statistics confirm 193,000 people were made redundant in the last quarter of 2001. He said: ‘There are indications that unemployment will rise and trends for this type of insurance indicate people do not tend to buy it.’
Chris Sonne, spokesperson at Halifax, added: ‘A mortgage payment accounts for a significant amount of a borrower’s income ‘ especially in the early years of a mortgage. In an environment where there is an increasing risk of redundancy, it is important for borrowers to consider how they would manage if they were faced with a drop in income. Mortgage payment protection can help provide some peace of mind.’
Since the Council of Mortgage Lenders (CML) launched its mortgage payment protection initiative in July 1999, it has found there has been an increase in take-up, but it has levelled off recently.
Michelle Vosper, spokesperson at the CML, said: ‘This could be due to a strong housing market and low interest rates. People should seriously consider mortgage payment protection ‘ especially with possible interest rate rises in the future.’
Peter Jones, product manager for Paymentcare at Abbey National, warned those buying a new property. He said: ‘When people buy a new home, they often increase their mortgage repayment to the most they can afford. This means that mortgage repayments are a significant outgoing every month and payments need to be protected.’
The CML’s recent publication of research into the impact of benefit reforms said that by extending the qualifying period for State help with mortgage payments, the Government has weakened the safety net for home owners.