The Council of Mortgage Lenders (CML) has rebutted accusations of short sightedness in dropping its target for sustainable homeownership of a 55% take-up of Mortgage Payment Protection Insurance (MPPI) by 2004. The CML dropped the target due to the amount of equity that homeowners have in their property and low unemployment levels.
Insurer Select & Protect believes this is a mistake. Simon Hood, chief executive of Select & Protect, said: ‘This seems to be a rather short sighted approach. In the event of a person becoming unemployed, they will neither want to sell their house, nor spend their savings straight away. Many people’s savings have been hit by the stock market crash. Therefore the equity they have in their house could now be vital when it comes to retirement.
‘From the point of view of unemployment, we believe the Government figures are not wholly representative of the real situation, bearing in mind that there are stories almost everyday of large organisations announcing redundancy programmes.’
Sue Anderson, head of external affairs at the CML, said: ‘It is not a question of dropping the target but saying that as a measure of homeownership sustainability, it is not the best measure to use. We have moved away from using it as an indicator of sustainability objectives. We think the better way to look at the bottom line is on possessions, leaving a number of options to meet our objective of keeping them at a low level, and recognising the part other forms of insurance can play.’