Senior industry bodies have revealed they are looking at additional measures besides mortgage payment protection insurance (MPPI) to provide an enhanced safety net for homebuyers.
The group, which includes the Government and the Council of Mortgage Lenders (CML) as well as insurers and lenders, have formed a steering committee, the Sustainable Home Ownership (SHO) Initiative. It has been decided that while take-up of MPPI has been considerable, it is unlikely the original target of 55% will be met by July 2004.
At The Mortgage Event earlier this month, Steve Devine, associate director at Pinnacle Insurance, said the SHO Initiative will be pulling together indicating factors to provide a measurable gauge for the industry that will give a clearer indication of the situation regarding a safety net for borrowers.
The committee is hoping it will help provide a more detailed picture of sustainable home ownership, rather than looking at the penetration of MPPI alone.
Devine said it was time to accept MPPI was a limited measure of sustainable home ownership and more was required. He said what was needed was, ‘a safety net underpinned by responsible lending procedures, sympathetic arrears management and forbearance by lenders, MPPI and other insurance protection products, and State support targeted at those borrowers in most need and financial difficulty.’
Factors include the extent of the safety net, including MPPI and other insurances; the percentage of flexible mortgages both by number and value; the number of ISMI cases and the amount paid out; the number of new claimants of working age and amount paid; the forbearance arrangements and concessions adopted by lenders, and the number of possessions.
Bernard Clarke, communications manager at the CML, said: ‘We need to take into account mortgage cover from other sources, such as payments provided by some employers, income protection and critical illness, and the effects of flexible mortgages, which could ease problems in the short term. We are now in the process of undertaking a review which will give us a clearer understanding.’