Marketguard launches interest rate insurance
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The insurer suggests 7.5 million borrowers are on a variable rate mortgage or are set to come to the end of their fixed rate deal and face the risk of rising interest rates.
The product, available today, allows a policy holder to choose their preferred excess and once base rate and the policy holder’s SVR rise by more than this excess amount, the insurance will automatically start paying out.
Chris Taylor, chief executive officer of MarketGuard, says that today’s borrowers are highly indebted and have overstretched to get on the housing ladder.
The firm’s research reveals that even the slightest increase in base rate could tip people over the edge.
Taylor says: “There is only one way for individuals to protect themselves from rising interest rates – through a fixed rate mortgage.
“We’ve changed that with the launch of this product which we believe will help bring some stability to the 7.5 million people who are either on a variable rate mortgage or coming to the end of their current fixed rate."
He says those borrowers have no way of remortgaging onto another deal because of the withdrawal of product, tightening lending criteria and the prohibitive cost of remortgaging.
Dr Phyllis Starkey MP, chairman of the Communities & Local Government Committee, adds: “ Anything that can help home owners cope with rising interest rates is to be welcomed.
“It’s encouraging to see the government clearing the way for new types of safety nets that provide more choice for consumers.”
Louise Cuming, head of mortgages at Moneysupermarket.com, says: "This is a well timed and innovative product that could provide many people with much needed protection and peace of mind. For financially stretched borrowers any protection from heavily increased mortgage outgoings could be crucial.
"However, I suspect the cost of taking out MarketGuard might dissuade many Brits. Families already suffering from the spiralling cost of living are unlikely to want to spend extra money each month, even though it could save them cash in the long run."
Marketguard suggests the average premium for a policy is around £500.
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