PPI an Antidote to Mortgage Arrears Says Burgesses

Share Article

Figures released by the Council of Mortgage Lenders, detailing an alarming growth in the number of homeowners falling into mortgage arrears, has prompted Payment Protection Insurance lobbyist Sara-Ann Burgess to urge homeowners to purchase cover that pays a monthly income should they lose their jobs.

Sara-Ann Burgess, MD Burgesses

but monthly bills still won't get paid and debts will continue to rise. I believe the only immediate practical solution is PPI. A small monthly outlay could pay rich dividends over the course of a year if the unexpected was to occur.

Figures released by the Council of Mortgage Lenders, detailing an alarming growth in the number of homeowners falling into mortgage arrears, has prompted Payment Protection Insurance lobbyist Sara-Ann Burgess to urge homeowners to purchase cover that pays a monthly income should they lose their jobs.

"There's a clear correlation between the increasing number of job losses and mortgage arrears, so it makes sense to buy a policy that will ensure continuity of income to meet monthly bills. PPI provides a valuable financial safety net for people whose income is interrupted through accident, sickness or unemployment."

According to figures released today, the CML reports the number of households at the end of September 08 with more than three months of mortgage arrears was 168,000. In June 08, the figure was 155,600, whilst in March it tallied 142,000.

It's widely-recognised that the economic downturn, slow income growth and increases in food and fuel costs have taken their toll and the CML predicts the number of households in arrears by the end of the year will far exceed its previous forecast of 170.000.

Sara-Ann continues: "168,000 households in arrears by Q3 this year equates to around 613* households per day unable to meet their loan repayment. This figure is staggering and frightening. Whilst I realise PPI may not be suitable for all, I do wonder how many homeowners could have given themselves some financial breathing space with a policy that pays their bills for up to a year."

PPI cover is sold per £100 of benefit and purchasers can opt for unemployment or accident and sickness cover, or all three. One of a few to continue offering employment cover only is independent firm, British Insurance. It charges £3.40 per £100 for unemployment, £3.90 per £100 for accident, sickness and unemployment and £1.90 per £100 for accident and sickness.

The CML paints a bleak picture and is asking members to avoid repossession at all costs and suggests the Government concentrates on providing more assistance in next week's pre-Budget report. It concedes that lenders cannot change the causes of financial difficulty, ie unemployment, and is aware the arrears situation will get worse before it gets better.

"It's all very well calling for lenders to be more sympathetic to homeowners' dilemmas and lobbying the Government to do more," says Sara-Ann, "but monthly bills still won't get paid and debts will continue to rise. I believe the only immediate practical solution is PPI. A small monthly outlay could pay rich dividends over the course of a year if the unexpected was to occur."

Repossession statistics stand at 11,300 for the end of September. In June 08, the figure was 10,100 and it March it stood at 8,800. Sara-Ann concludes: "To the end of September, some 41** homes were repossessed daily. And this doesn't take into account properties that have repossession orders hanging over them.

"More has to be done by the lenders and Government to prevent this happening, but also insurers have a duty of care to ensure their cover is accessible and affordable to all and consumers need to be aware of the options open to them."

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Sara Ann Burgess
Visit website