michael sterios asked:


The Bank of England has slashed the Base Rate in previous months to an all time low. The reasoning behind this was to alleviate some pressure on current home owners and to help rejuvenate the financial economy hoping the banks would begin to lend money again. It is still too early to tell if the drastic measures of the Bank of England were necessary, but the short term effect show okay results.

For those individuals that have a variable, or floating, rate mortgage, the reduction in base rate will increase their cash flow significantly. If you have a £500,000 mortgage and were paying 1% above the Base Rate, your mortgage payment in September 2008 would have been £2997. In June 2009, your mortgage payment would be £1,725. The change in base rate will save you £1,272 per month in mortgage payments.

The Bank of England was hoping that the savings in mortgages would help consumers spend the saved money in other areas, such as the automobile industry or the retail industry. Unfortunately, statistics have not shown a considerable increase as of yet. Most experts believe that it is because people are concerned about the future and are saving their money. Unfortunately, the low base rate means that savings accounts are paying practically nothing in the way of interest.

While the base rate has helped those on a variable rate, it has made those people with a fixed rate mortgage look into remortgaging their property. Fixed rate mortgages, while safer in a time of rising rates, are not nearly as attractive looking right now, in this time of decline. As mentioned previously, with a savings of potentially over £1,000 per month, it is worth it for those on a fixed rate mortgage to seriously consider looking into remortgaging.

It is an uncertain time and the economy is still struggling, but no one knows how low the Bank of England is willing to cut the Base Rate. As of June 2009, it can not go much lower. Even more caution is given to thinking about when the Bank of England will raise rates. This is more concerning to individuals with variable rate mortgages. The unknown nature of the rates market is what makes it so frustrating, yet so exciting.

Once the rates begin to rise, more people will want to obtain a fixed rate mortgage, so that their mortgage payments do not start to increase every month. It is knowing when to make the change that is the big gamble. If you make it too early, you lose out on taking advantage of extremely low rates. If you make the switch too late, your fixed rate will be higher.

Currently the low base rate is affecting the remortgage area of the UK mortgage market the most. It is allowing those on a fixed rate to take advantage of a lower variable rate. Until banks begin to lend significant amounts in the consumer market arena, the effect on new mortgages will not be seen.



Wilma

Steve Smith asked:


Copyright (c) 2008 Steve Smith

The UK mortgage market is beginning to return to a state of normality after an extended period of high prices and easy access to property purchase loans, Your Mortgage has claimed.

While many homeowners may be worried about tumbling house prices and first-home buyers may be struggling to get their foot on the first rung of the property ladder, the market has for some time been inflated beyond realistic levels, presenting people with a home sales environment that was “too good to be true”.

For those who are having difficulty securing finance for a property in this unfavourable climate, taking out a personal loan may be an effective way to boost the amount of cash that can be put down as a deposit, thereby encouraging lenders to extend finance.

Meanwhile, Your Mortgage said that both buyers and sellers should brace themselves for an extended period of adverse property conditions, with a recovery not expected for at least 12 months.

Commenting recently, Barney McCarthy, editor of the independent advice website, said that the recent falls in house prices would not necessarily help first-time buyers enter the market.

“While house prices are lower than they have been for a long time - so it looks more affordable - the actual lenders themselves are more reticent to actually lend the money and are actually requiring much larger deposits than before,” he said.

However, Mr McCarthy went on to remind people that the current situation is not as dire as it could be.

“The situation at the moment isnt as bad as people make out; over the last couple of years it has almost been too good to be true and now it is returning to something more approaching normality,” he commented.

However, he did say that the days of easy access to loans and credit had been resigned to history, suggesting that many Britons will have to work harder to secure finance for the foreseeable future.

For those who have found themselves shut out by banks as the financial woes have rumbled on, taking out a bad credit loan may prove an effective way to begin to repair damage done to their finances. In applying for this type of loan, people could find they are able to begin to make regular payments on items outstanding in a bid to present a more positive image of their financial position to banks and other lenders.

Meanwhile, Mr McCarthy concluded by suggesting that while some would struggle as cheap mortgage lending began to dry up, he said that this could soon pave the way for a more measured approach to borrowing where consumers are less likely to struggle to keep up with mortgage repayments. In such a scenario, consumers could find that it becomes easier to put money aside each month. According to research carried out by Nationwide, a quarter of Britons currently feel that they are not saving enough money, although more than half (52 per cent) said they are hopeful they will be doing so in six months time.



Beverly

Shane Brooks asked:


Marketing your mortgage business to For Sale By Owners (FSBOs) is like having multiple gold mining strikes coming up in a number of places all at once. It is great. When it comes right down to it, once you know how to work with FSBOs, they are the quickest way out there to have a successful mortgage business.

If you are new to mortgages, you should know going in that FSBO’s are not really all that fun. To tap the market, you have to be diligent, stubborn, and really have the perseverance to make sure you succeed. Most newcomers get one good “no”‘, and they’re done with FSBOs forever. The truth is that they are worth the effort.

Why do so many mortgage people fall short on FSBO markets? There are actually a number of reasons. One of the biggest reasons is that they are not determined enough. Another, though, is that they simply do not have a good plan for how to handle it.

Here are a few ways to get started in working with FSBOs: First of all, stake out your territory. Figure out where or what type of FSBOs you are going to target. Once you set that goal, go ahead and make it a little more: say that you are going to work with all the FSBO’s in that area.

Secondly, don’t get carried away. Sharpen your skills with a smaller area before advancing to a larger one. By starting small you’ll save time and money. When you get better, then you can expand and use the newly learned efficiency.

Next, make sure you are continually checking for new FSBOs. This is something you need to be doing all the time. In fact, it should be a part of your daily routine so that you never miss one. This is imperative.

Fourth, you should document your FSBO findings. Record the information for each FSBO in your computer, on cards, or even just on a board. No matter what, keep good records. This will help you down the road when you want to do more. Also, don’t wait until you have every bit of information; instead, try to add information as you get more.

Fifth, make sure you come up with a plan of action to go with each FSBO. You need to start thinking strategy for each one as soon as you get the information. Have an idea of when you are going to call and what you are going to say so that your approach is right.

Next, make sure you are performing your duties on the plan every single day. This strategy is not for those wanting a 9-5 ob. This is going to take time. Really serious FSBOs want to know that you are going to work for them. You need to show that you are going to get the job done whether it takes nights and weekends or mid-afternoons.

Finally, make sure you contact your FSBOs. You may think of dropping a note, but really you should just go ahead and make a call early. On the phone you’re better able to cater your message to the particular customer. You can refer to your notes, approach them more softly, and contact a number of FSBOs in a short amount of time. You can even make contact by stopping by the home. A face to face encounter can do a lot for your chances. You can also make sure they understand what you can and will do for them. So when you can, meet face to face. When that won’t work, you need to make a call, and then if you have to you can drop a note or a letter to the FSBO’s in the territory you have defined as part of your goal.

IN addition to all of these plans you make to attack the FSBO market, there are alternatives. If you are not the FSBO shopping type, you can always find ways to join in on the realtor partnership and referral market. With the right program, you can get plenty of free referrals to buyers who are moving from rentals. These are the crown jewels of the mortgage industry and can offer a lot of help to you in terms of making your life easier as a mortgage originator.

So whether you pursue FSBO’s, another niche, or choose to enter into a partnership, the mortgage business is one in which you are going to need a plan. Just make sure yours is a good one.



Susan

Mark Aucamp asked:


Mortgage resuscitation required urgently!

The UK housing market will not recover until the mortgage market is fixed and expert advice at the Bank of England says, print more money in the hope of saving our economy from a long and drawn out recession is the answer. The Council of Mortgage Lenders says the number of UK households with mortgages is 11.7 million and has a value of over £1.2 trillion of these approximately 51% are fixed rate mortgages; 40% are on tracker, discounted or variable rate mortgages and less than 8% are on their lenders standard variable interest rate scheme. The mortgage market needs urgent resuscitation and repair to restore the banks lending confidence. We may have green shoots appearing across our economy but they don’t seem to have any roots yet.

A recent poll of 539 professional mortgage brokers by Exact Mortgage Expert suggested that house prices were likely to continue falling for the next six to twelve months and the housing market had not bottomed out yet. Many housing commentators feel that the market still has a further 6% to 7% to fall before we reach this illusive bottom is found. Lloyds Banking Group say that the decline in property prices this year is around17.7% with the average home now valued at £154,716. In the last year the average property value has plummeted by £33,264.

Sub-Prime borrower in Limbo

According to the latest Mintel, one third of the UK mortgage borrowers are facing financial difficulties and 1.5 million have fallen behind with their monthly mortgage payments. Those borrowers that have fallen behind with their repayments are considered by future lenders as sub-prime borrowers and they are offered less than favourable interest rates when they come to remortgage. There are now only two lenders remaining that will consider sub-prime or non-standard mortgages compared with the non-standard or sub-prime industry prior to August 2007 when the ‘Credit Crunch’ started. Whilst the lenders have disappeared the sub-prime borrowers have remained in limbo not knowing where to go or what to do and the number new recruits has swelled.

Since the rescue of the banking system by the Government last year and the sharp drop in the base rate by the Bank of England it seems that all the lenders have lost their appetite to lend money to homeowners and potential new borrowers. Lenders are nervous about incurring further losses and have drastically tightened their lending criteria. This means that borrowers are unable to refinance their homes easily and first-time borrowers now require a deposit of around 25% just to get on the property ladder. As a result of this large deposit being required many have turned to the bank of mum and dad for help in raising a deposit. The lenders have now become very choosy who they lend money to.

Finding a Mortgage

Borrowers looking for a new mortgage will find it impossible if they have suffered any adverse credit history within the last six years like:

A default issued by a lender, an Individual Voluntary Arrangement or a bankruptcy order.

1.Any missed credit card and any loan payments.

2.Any missed mortgage and secured loan payments.

3.Need to borrow more than 90% of the value of your home.

4.Falling house price

5.In sufficient deposit to buy new home

Placing a mortgage is like riding in the Grand National

Mortgage brokers report that they are at their wits end trying to place mortgages with lenders in the current market. They liken the placement of a mortgage to being a jockey in the Grand National with all the steeple jumps needing to be jumped over to complete a mortgage application. Most lenders are inundated with mortgage applications which have slowed down their processing time. When finally they do look at the application three weeks later the payslips and bank statements are out of date and need to be updated. Then the valuers down value the property and the loan-to-value percentages changes and finally interest rates are pulled without notice. It’s a nightmare! To submit a mortgage and have it complete is a ‘rare occurrence’ and that’s assuming that you have jumped through all the hoops and met the lenders criteria.

Seek a Debt Solution if you are struggling!

For those borrowers that require a non-standard or sub-prime mortgage it may finally be worth looking at a debt solution as debt consolidation is no longer an option open for reducing your debt by using your home as a ‘Cash Machine.’ If you are struggling to pay your credit card debts and unsecured loans then it may be time to get out of debt and seek advice and help. You need to seriously consider a Debt Management, Individual Voluntary Arrangement or possible bankruptcy proceedings. Don’t be rushed and think carefully about what you are doing. Always speak to your credit card and loan providers to see what they can do to help you first.



Louis

michael sterios asked:


As the majority of people are aware, the entire world began to feel a financial crisis in the summer of 2008. While some people claim to have predicted it to happen, and those of us working within the mortgage industry knew eventually the bottom would fall out, I do not think the world was ready for the rapid decline that happened.

To make matters worse, the press and the media continue to harp on the Credit Crunch. The media continues to print gloom and doom stories that do nothing more than paint the bleakest picture imaginable, no matter if they are factually true or not. The worst part of the situation is that consumer confidence is based around what is read in the newspapers and what is seen on TV. The media is one of the only ways that people not directly involved in the credit crisis gets information on the state of the economy. Misleading information can be the route of serious consumer doubt, which only hurts the economy more.

It is a proven fact that banks are not lending money to individuals for mortgages at the level they were a year ago. In addition to a lack of lending, there are also fewer products available in the consumer mortgage market. The positive news for the short term is that those people who have a variable rate mortgage have seen their mortgage bill drop, as the Bank of England has currently set the rate at an all time low of 0.5%. While this is bad news for those hoping to earn interest from savings, it is positive news for those with a variable rate mortgage.

The media continues to report on the declining housing market by claiming that the values of houses are down over 25% in some parts of the country. What they media do not show is the amount that people are willing to pay for a house, if they had the financing available to them. This is a chicken and egg scenario, unfortunately. Until the banks start lending money to people who are looking to purchase a house, housing prices will remain stagnant or drop because there is a very limited supply of people available to buy them.

The media and newspapers have the ability to help the UK out of the credit crunch, out of the financial misery the world is currently in. Unfortunately, the good stories do not sell as many newspapers as the expenses scandals and the “fat cat banker” bonus announcements. It is important to understand the full truth of the situation. If you ignore the reasons that the UK is in the mess, it will certainly end up here again, but the media should be willing to promote some of the positives, some of the green shoots that are being seen.

It is going to take more than a few happy newspaper articles to raise consumer confidence and to start to turn this mess around. However, the media understands the extensive role they play in the information they give to the public and they should be critiqued more heavily and punished if they continue to print false and misleading information. The UK will survive this recession, but it would be much easier if everyone would begin working together for a better tomorrow.



Tracy

michael sterios asked:


Once upon a time self-employed workers found it nearly impossible to get a mortgage unless they had an enormous deposit and a large income from their business activities that spanned many years. Those times may be about to return as lenders are pulling their self-certification mortgage products from the market as if they are tainted beef.

Many years ago lenders had strict criterion regarding who they would lend money to and the circumstances under which home loans would be approved. Life was simpler then as the great majority of the workforce had steady employment, a salary or wage, and monthly payslips.

However, as time went by the workforce slowly evolved into a mix of employed and self-employed workers, business owners, investors, and freelancers. Although a large portion of the workforce remained employed, a significant portion of those workers began to receive bonuses and commissions instead of a salary. This created uncertainty regarding their monthly incomes. Additionally, many other workers became self-employed and others became proprietors of small businesses which provided their daily bread.

Finding a standard employee with a steady, provable and predictable salary was no longer easy. This meant that traditional mortgage products were no longer applicable to a large portion of the workforce so lenders were forced to invent a new type of home loan to ensure they could keep on lending.

Enter the self-certification mortgage. A product originally designed for self-employed workers who did not receive a pay slip from their boss each month. Instead these workers contracted out their services to business that would pay them by the hour, or they ran their own small businesses and billed their clients when their work was done. Many self-employed individuals who worked in this manner had high levels of income so it seemed ludicrous that they should be excluded from the mortgage market.

Self-certification mortgage products were therefore launched onto the mortgage market with the best intentions - to satisfy the needs of self-employed individuals who lenders believed could service the loans. Unfortunately, due to lax lending rules, self-certs were also approved to people with low incomes who simply lied on their application forms about how much they earned. In addition to this, many lenders reduced their required deposit levels, meaning that people with little or no savings could also apply for a self-certification mortgage.

Because of this, great sums of money were loaned to people who should not have been approved for a mortgage. Mortgage brokers and borrowers alike took advantage of the lethal combination of low deposit requirements and not having to prove earnings to the lenders. Self-certification mortgage products are now being squarely blamed for much of the damage that has occurred via the global credit crunch. As a result lenders have pulled hundred of self-cert products from the market and are refusing to lend to anyone on a first-time-buyer basis.

For existing home owners looking to remortgage, lenders have reverted to the stricter criteria that were attached to self-certification mortgages in the first place. These include low loan-to-value ratios and proof that applicants are truly self-employed. Perhaps the lenders had it right in the beginning.



Oscar

Steven Clarke asked:


Hometrack, one of the housing industry’s leading sources of market-related intelligence, predicts that: “2008 may just provide the pause for breath the mortgage and housing market really needs.” Gary Styles, the Strategy Risk and Economics Director at Hometrack predicts that “lenders will take stock in 2008 and review and analyse their lending practices and policies to see if they match the long and short term outlook for the market and indeed review their own objectives.”

Hometrack forecasts aggressive competition within the mortgage market that will offer cheap mortgages for borrowers. These cheap mortgages are likely to be targeted at borrowers in the ‘low-risk’ category.

However, since the formation of the Financial Services Association in 2004, those in the ’sub prime’ market need not feel excluded. Perceived wisdom works on the assumption that those with poor or negative credit scores are only eligible for almost-unaffordable mortgages with extortionate interest rates. It also assumes that mortgage brokers will charge them higher fees for the same services offered to clients with positive credit scores. In 2006, the FSA dictated stringent guidelines to make the fees charged by mortgage brokers more transparent, thereby exposing the less scrupulous companies.

Currently, the majority of reputable mortgage brokers do not charge their ’sub-prime’ clients any more for their services than they do their other clients. This has opened the door for many with poor credit scores to take advantage of this important service and source affordable or cheap mortgages.

Some mortgage brokers now dedicate part of their service entirely to those with a poor credit history. Companies, such as The Mortgage Broker Ltd, offer free advice and quotes from the whole of the market, ensuring that every available avenue is pursued in the search for a reasonable mortgage; most people do not realise that mortgage companies are not necessarily the only lenders to approach. Specialist advisors can often provide alternative sources for borrowing or suggest other courses of action to undertake, such as re-mortgaging. There is also the option for ’sub-prime’ clients to switch to a normal repayment mortgage once they have fully rehabilitated their financial situation.

Lenders assess whether an applicant is credit worthy in a number of ways. The first, and most obvious, is the application form itself, which gives details of salary, family size, reason for the loan and whether the applicant is a homeowner.

Secondly, if the applicant has used the lender’s services before, they will take into account their knowledge of any dealings they may have had with each other. Thirdly, they will use files from credit reference agencies: Equifax, Experian or Callcredit. These agencies carry financial data detailing the payments and transactions made by every individual in the UK. Those who have failed to meet repayments, incurred CCJs or have been declared bankrupt will be allocated an adverse score that reflects the potential risk that they offer to lenders.

However, using a mortgage broker who can access mortgage deals from the whole of the market can open up a realm of possibilities for those with bad credit, especially as the brokers can often negotiate mortgage-terms that would seem previously impossible. ‘Whole of Market’ brokers also have no loyalty to particular lenders, so applicants of any credit score can be sure that the advice they offer will be impartial and with the client’s best interests at heart.



Joann

michael sterios asked:


Much has been written about the sub prime mortgage crisis in the US and even more has been said. Most analysts placed the blame for the implosion in the credit market on the adverse credit mortgage. This is a type of home loan that is issued to a borrower with a less than impressive credit history and financial resume. However there is another factor which may have been overlooked. This same factor may be about to spur a mortgage bonanza in the least likely of places - Africa.

In addition to issues billions of pounds of mortgages to people who had little chance of repaying them, the increased liquidity in the financial markets is mostly to blame for the current sub prime crisis. Banks and other financial institutions were simply too cashed up in the late 1990s and early 2000s and lowered their lending standards accordingly. Lenders had so much money they were almost forced to dream up new products to market to home owners and first time buyers in a marketplace that was already at full capacity.

This is why lenders eventually got to a stage in which they began to approve adverse credit mortgage products to just about anybody who applied. They weren’t the only product available at the time and although they may have been the trigger for the collapse in the financial markets they were not the only contributor.

This excessive liquidity is currently being experienced by several of the biggest banks in sub-Saharan Africa. While this market is tiny in comparison to Europe and the USA some of the factors which were prevalent in those markets ten years ago are emerging in several African nations today. This is opening up the prospect that Africa may be about to experience a small boom in their mortgage market.

Unlike the European and US markets, however, the African home loan market is far from overcrowded. A minority of the population have a bank account or use any type of banking facility at all let alone have a mortgage. The home loan market is exclusive and usually only available to the elite but there is a growing middle class demographic with an appetite for home ownership.

It is also unlikely that African banks will be developing adverse credit mortgage products similar to their Western counterparts. This is largely because many Africans simply do not have a credit history and therefore do not have impairments to their credit files. Instead, home loans are issued only to workers who are paid a salary and who have stable jobs. It is common in Africa for lenders to be paid their monthly mortgage repayments directly from the borrower’s employers instead of from the borrower’s bank accounts. This helps reduce risks to the lenders and as a reward the borrowers are often granted lower interest rates.

In the wake of the adverse credit mortgage crisis an unlikely beneficiary may therefore be Africa as lenders are increasingly looking for new markets to conquer for profit. It will be many years before the Western home loan market are fully repaired so it could be Africa’s time to shine.



Tammy

Shane Brooks asked:


There are many ways that many mortgage originators go about producing leads. They talk with realtors, builders, and even try buying leads. However, believe it or not, there are many mortgage originators out there who are able to get leads before they even get as far as their realtor.

The method such mortgage pros use is called direct mortgage marketing and the mortgage professionals using this method are working on a whole different plane than much of the rest of the industry. The best part is that it is exactly what it sounds like it is: simply marketing to consumers, prospects, and clients before they are even thinking of making a mortgage decision.

The pros that use this method were visionary in a way because they knew the direction of the market. If you are like many mortgage professionals, then you have noticed the saturation of the market by builders and agents that control the entire transaction from purchase all the way through the mortgage. This process freezes you, the mortgage originator, out of the entire process. It can be frustrating.

If you choose to market to consumers before they make a mortgage or real estate decision you are getting around this new market trend. You’re creating rapport, a bond, and putting yourself in the position of a trusted financial advisor with your contacts.

Once you are able to pre-qualify them for a loan, you have completely eliminated any competition that may have been lingering out there before hand. Anyone would be out of their mind to suggest that your client start their mortgage process all over again with a new loan officer and a new company just because they made a decision to buy. After all, if you have a pre-qualified client, then you are ready to go and to close the loan quickly, right?

So how do you find the right mortgage direct marketing technique? There are a few things you can do to get potential clients so that they are thinking of you when they get ready to get their mortgage. Here are just a few of the direct mortgage marketing techniques you may wan to consider.

Use What You Have: You probably have a database of potential clients already. Market it hard all the time. Send out timely cards, reminders, and even informational articles to keep in touch. Make the information useful so that they do not feel you are pressuring or pestering them.

FSBO’s: For sale by owner homes offer a great market for you. Offer to help them sell their home by pre-qualifying their prospective buyers. This will get you in contact with the sellers who will likely be buying and also help you qualify people who are in the market enough to be looking at a home.

Write: By writing informative article and information for your prospects, you are giving them really valuable help. While not everyone you supply with information is going to work with you, it is a great way to get the lines of communication open with those who have not yet made a buying decision.

Market to Others: Try marketing your business to those who may know new buyers. Divorce attorneys and financial advisors are great contacts to make that can help you get in touch with buyers well in advance of their first home buying experience or their first mortgage decision. When that time comes, though, your name will be the first of which they think.

Marketing directly to the buyers before they make a decision can be very helpful to your mortgage business. What, though, about mortgage advertising to others with leads in real estate. By talking with a real estate agent, you can get a lot of business sent your way.

With the right system for partnering up with real estate agents, you can help turn renters into buyers. In the mortgage industry, they call those easy to pick fruit or low hanging. Simply put, you need to partnered up with a real estate agent or even a few real estate agents.

Once you do that, you will see your business sore while the amount of leg work and phone time you have to log will go down. It is a good trade off that helps your business.

So find the right system for you and consumer direct mortgage marketing will be as easy as can be. No more being shut out by the contractors and builders. You will create your own database and your own series of leads.



James

Sheila Challiner asked:


Private insurance is seen as a safety net if problems arise due to the risk of unemployment, debts, repossession and the possibility of illness. If someone has a 100,000 pound mortgage, an increase of ten to twelve pounds a month would provide cover for the insured for the interest per month paid on the mortgage, should they run into problems.

With personal debt now totaling over a trillion pounds, the Government is pushing these new initiatives on private insurance. Bankruptcy is increasing and home owners are coming under pressure if they miss repayments on their mortgages. The possibility of repossession is worrying and frightening.

It’s ironic when you realize that the taxpayer has coughed up some 8 billion pounds in benefits over the last 10 years in mortgage interest payments to support the unemployed. The treasury is now trying to off-load this onto to the responsibility of public and mortgage lenders.

Insisting that compulsory Mortgage Payment Protection Insurance (MPPI) should be enforced would not be a popular move as it increases costs when buying a house, and some experts are of the opinion that the Government should impose that expense onto the lenders, to come from their profits. It is no secret that building societies and banks make massive profits on selling MPPI and premiums are currently around 800 million to 1 billion yearly despite only just under a quarter of buyers having made the purchase. With the profit on this being 250 to 500 million pounds, you can follow the Governments way of thinking.

What the Government realizes is that 75 per cent of homeowners are left without protection if they fall on hard times. It’s true that the benefits system is in place and gives support via Income Support for Mortgage Interest, but there are limitations on claimants.

The advice from the Council of Mortgage Lenders (CML), the voice for banks and building societies, is for first-time buyers to take out insurance to protect their homes. However, they are strongly against making MPPI a compulsory product, especially if it increases the buyer’s outgoings.

The CML believe that if the industry has to absorb this cost then the outcome will be that mortgages will go up as this money will have to come from somewhere. Even if it is not seen as a separate premium, it will be built in and will increase the overall cost. In their opinion margins have been squeezed for some time now and it is making it impossible for firms to absorb this extra too.

The CML think that people should be free to make their own choices and arrangements with regard to this insurance, which may not be appropriate for everyone. It could be that people may have sufficient protection from other insurance, or through their employers or possibly substantial savings. In this case it would be unreasonable to enforce someone over insure.

Iain MacQueen-Sims, credit and debt expert of Omnichek, does not agree with the CML His opinion is that by making MPPI compulsory it would create a safety net and that it shouldn’t add to homeowners costs. The lenders can easily fund it without any price increases and they should show some loyalty to a market where they do very well out of their customers.

A draft of the European Directive on the mortgage market is in favour of compulsory MPPI in all member states as a standard procedure. A spokesman for the Department of Work and Pensions has stated that “anyone taking out a mortgage should think hard about protecting their income.”



Daniel