Repossessions are rising, although the 2005 level is still 70% below that of 1998. This shows we are nowhere near pressing the panic button but that attention must be paid to these trends.One area to examine in this regard is mortgage payment protection insurance, as perhaps the rise in repossessions could be partly linked to the low level of MPPI take-up. The low take-up of MPPI has been recognised as a problem since 1999. Since that time, many parties have recognised the importance of MPPI and measures have been put in place to raise sales to around 50% of all mortgages sold. This was too optimistic. The 2006 figure looks likely to be around 27%, leaving a staggering 73% of mortgages without cover. This must be a concern for us all. Of course, much has changed since 1999. Policies have become easier to obtain and are far more competitive. General insurance regulation has kicked in, making sales even more pressurised for time. And perhaps most damaging of all have been the banner headlines proclaiming payment protection in the unsecured lending market as bad value and virtually useless. All this has been akin to Chinese water torture for brokers. Already overburdened advisers have had to fit in another regulated product sale and they are finding it difficult to cope. Add to all this sceptical consumers who are confused and in many cases misinformed about the benefits of the cover and it’s no wonder sales are static. It adds up to an almighty headache. The tragedy is that policies are now far more flexible and better value than before. There are many more providers in the market and this competition has resulted in lower premiums. MPPI is not expensive and provides invaluable cover. The average premium is just under 5 per 100 of mortgage payment. The way forward? Less regulation, better informed consumers and a more supportive press that understands the issues would be a good start. Low MPPI sales are too important to ignore. Any takers for supporting the compulsory selling of MPPI?
- Top trends
Despite a recent flurry of building society mergers, independence is key to the future, says Stafford Railway. Mike Heenan, chief executive at Stafford Railway, says: “We have already seen agreement for three mergers this year, with some deals seeing larger societies swallowing up smaller players. “With speculation of rising costs and shrinking margins, industry commentators […]
Mortgage and insurance network LIME has added CHL Mortgages, the buy-to-let and self-cert specialist, to its panel.CHL Mortgages joins 41 existing lenders in LIMEs mortgage club, specialising in self-cert and buy-to-let mortgages. As an intermediary only lender, CHL Mortgages prides itself on service and has won Financial Advisers 5 star award seven years running.Keith Richards, […]
It would be fun to see the reasons lenders give the FSA in response to its call for them to justify raising their exit fees, as there can’t be many good ones, says Drew Wotherspoon
Concerns are mounting that brokers are shying away from offering equity release products due to their perceived perception from both the public and the regulator.Delegates at this mornings opening session on new business opportunities said that they had steared clear of the market due to the associated risks.The Financial Services Authority has previously called the […]
The UK is ending what has been its slowest economic recovery on record with a marked acceleration in growth. Neptune’s forecast for UK GDP growth in 2014 is 2.5 per cent, up from 2013 growth of 1.8 per cent as estimated by the Office for National Statistics. When considering the changing UK macro outlook, three important questions remain:
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