MPPI still offers invaluable protection during fragile recovery
March 2010
Despite The Council of Mortgage Lenders (CML) reducing its repossession forecast for 20101 it looks like the road to recovery is going to be a bumpy one and a recent report from the Chartered Institute of Personnel and Development would certainly indicate this.
According to the latest CIPD/ KPMG research, redundancies are set to increase during the first three months of 2010 with a third of employers in the public sector apparently planning job cuts2. What's more, despite a 13 per cent decline in repossessions in the final three months of 2009 on the previous quarter there were still 10,200 properties taken into possession equating to 110 a day.3
Michael Coogan, director general of the CML, said: "We are not out of the woods yet - 2010 will still be a challenging year for many borrowers and some households will inevitably find their finances being squeezed if and when interest rates do eventually rise."
The fragility of recovery is further evidenced by cracks showing in the construction sector in the final three months of last year with official figures published showing that orders were flat over the fourth quarter of 2009 compared with the previous quarter and January figures are also expected to be down as a result of the extreme weather.4
Neil Galjaard Insurance Director at Paymentshield comments 'For the 110 families loosing their homes each day it certainly won't feel like things are improving and for those people teetering on the brink of repossession, rises in the cost of living and further redundancies could be all they need to push them over the edge in 2010. Recognising the importance of keeping people secure in their homes, the Government launched a £285m Mortgage Rescue Scheme, designed to help 6,000 households avoid repossession, but unfortunately that has helped just 276 households since it launched in January 20095. We can see that MPPI offers a far more secure support mechanism for homeowners. Last year Paymentshield paid out on over 13,000 claims, providing security and continued home ownership to those policyholders.
During 2009, Paymentshield paid around £1 million in claims each week, offering claimants up to £3,000 per month to cover mortgage payments and mortgage related expenditure for up to 12 or 24 months. In addition, 'HELP' cover is included as standard for our Mortgage Payment Protection products. This cover offers a confidential 24 hour helpline offering free legal advice which would include employment disputes. It also includes health, medical information and counselling as well as legal expenses cover.
Galjaard continues "It's clear that Mortgage Payment Protection Insurance should still be the first-resort for preventing repossession and providing much needed peace of mind in the current uncertain environment with the threat of redundancy still looming over many."
1 Source: www.cml.org.uk, Press Releases "CML cuts 2009 repossession forecast to 48,000" 12th November 2009
2 Source: CIPD Press Office, "Jobs outlook worse this quarter as pain spreads to public sector quicker than private sector recovery, says CIPD/KPMG quarterly Labour Market Outlook survey", 15th February 2010.
3 Source: www.cml.org.uk, Press Releases "Mortgage arrears and possessions declined in fourth quarter of 2009" 11th February 2010.
4 Source: www.timesonline.co.uk "Housing repossessions reach 14-year high" 12th February 2010.
5 Source: www.communities.gov.uk "Frequently asked questions about the Mortgage Rescue Scheme"
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