CML insurance costs worry brokers
MORTGAGE STRATEGY - 24TH JUNE 2002
The CML has been accused of hypocrisy by mortgage brokers after it defended its members’ costs for mortgage payment protection insurance policies.
Mortgage borrowers are the group most vulnerable to being overstretched with extra debts such as loans, finance deals and credit arrangements, and the lenders’ trade body has urged caution.
CML director-general Michael Coogan says: “Against the current economic backdrop it would be worrying if there were large-scale problems in coping with debt. The fact that some households are struggling or appear vulnerable to adverse events like an unexpected loss of income, should encourage caution.”
But lenders’ fees for MCCB insurance are generally higher than those offered through brokers. Over 25 years, borrowers with a monthly mortgage payment of £6,500 could save over £2,500 by taking out mortgage payment protection insurance cover with a broker. Paul Banfield, partner at Best Advise Financial Planning, says: “Unfortunately lenders have a captive audience and people are not aware of the money they could save. Lenders are pushing beyond the realms of reasonability.”
And Ken Janson, IFA at Torquay-based Seaway Insurance Consultant, adds: “It’s criminal. Mortgage payment protection insurance offered by brokers can be cheaper and offer up to 25% more cover, which may also include any additional increase in mortgage payments.”
