Regulators should stress test based on loss of income due to illness – Star Letter 26/03/2021

Regulators should stress test based on loss of income due to illness – Star Letter 26/03/2021

 

The first this week came from Trying to be a Retired IFA under the article: Quarter of homeowners miss mortgage payments due to ill health – MetLife 

They said: “This is why the regulators should look at stress testing income from accident and illness, not just from a rising interest rate. Where advisers talk of the total costs of the mortgage, including mortgage payments and all insurances, the success in clients understanding the need to protect themselves and doing so goes up. I’ve seen this work.  

“Clients need to be educated yes, but so do some advisers who sell a mortgage and then try to upsell when clients are already thinking about the existing costs.  

They added: “Include it in the conversation, explain why and quote an all in figure within their total budget. Also, advisers revisiting those who couldn’t afford everything at outset is another way to ensure the client is aware and protected for things we all know can happen. 

 

Mortgage guarantee not solving affordability problems 

Robert Craig reacted to the article: Let’s not expect miracles from government’s mortgage guarantee scheme – Ganatra  

Craig said: “This [scheme] does nothing to solve the real problem that even those of us with a £20,000 to £30,000 deposit still can’t afford to buy a house in the south of England because property prices are too high compared to income. 

He added: “I have literally just spent the last three weeks looking for somewhere to buy, and out of the nearly 130 potential properties I have looked at and seriously considered online, only three of them are affordable and even then, only with shared ownership. 

“Not because I don’t have enough deposit or monthly income to service a mortgage, but because I can’t get a mortgage for more than five times my salary, and even with a £20,000 to £30,000 deposit, house prices put that number out of reach.