Lenders clash with Lilley over home loans aid
Wednesday 18 January 1995
"What we drew from the meeting is that this is no longer a Government for home ownership," said Adrian Coles, secretary general of the Council of Mortgage Lenders.
The Government spends £1bn on income support for mortgage payers and is looking at ways to cut this bill, yet it spends £10bn on housing benefit, mostly for council tenants.
The Government announced in the November Budget that it plans to cut mortgage payments it will make for home owners claiming income support .
It currently pays half the mortgage interest for 16 weeks, then the full amount, but from 1 October new borrowers will get no payments at all for nine months. Existing borrowers will get no help for two months and half payments for a further four months.
Mr Coles said the two sides could not agree about the scope for private mortgage insurance. "We think it will be expensive with limited coverage. They think it will be universal and cheap."
There is no question of mortgage insurance being made compulsory, he said. The Government is not going to do it, although they considered whether the mortgage lenders might make it compulsory.
"That's not viable. It's a competitive market. Lenders not making it compulsory will get the best borrowers," he said.
Mark Boleat, secretary general of the Association of British Insurers, said he personally would never take out mortgage insurance and there were many others who did not see the need for it in their own circumstances.
About a third of new buyers take out mortgage protection, and the market could be for 50 to 80 per cent of borrowers. It usually starts payments after 60 days and they continue for one year. Most lenders have their own version of the cover and charge, onaverage, £7 per £100 of monthly payments, but rates can go as high at £10 per £100. For a loan of £50,000, this would add £36 to the £360 monthly payment.
The lenders did wring one small concession from their meeting with the minister. Mr Lilley assured them that the standard rate of interest that will be used to assess claims would be a genuine average of current rates and would not be artificially low tolimit the cost to the Government.
There are about 15 insurance companies in the mortgage payments market, which is worth £250m a year in premiums.
General Accident is piloting a new form of the cover where five factors are taken into consideration to set a rate - age, gender, location, occupation and employer's business. The first two factors weigh most heavily, as claims for sickness have more impact as people get older.
Nicola Yeoman, development manager of General Accident Direct, said the average claim was for five or six months. "Most people have gone back by nine months. It will not be possible to trade off immediate payment for limiting cover to nine months."
Leading article, page 17
- 1 I was a Woman Against Feminism too
- 2 Fifty Shades of Grey movie trailer released: First look at Jamie Dornan as Christian Grey
- 3 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 4 Students offered grants if they tweet pro-Israeli propaganda
- 5 Israel has discovered that it's no longer so easy to get away with murder in the age of social media
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned
Peaches Geldof: Her final day – and her fatal decision
Students offered grants if they tweet pro-Israeli propaganda
Israel-Gaza conflict: Israel may have committed war crimes, says UN human rights chief
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...
competitive: Progressive Recruitment: This really is a fantastic chance to joi...
£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...
£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...