Insurers are reviewing their mortgage products after a report last month from the Institute of Actuaries (IoA) criticised the products, and warnings from consumer groups that thousands of endowments may have been mis-sold by advisers, who failed to make their risks clear.
Pearl said yesterday that it would launch a series of "healthchecks" to see whether existing customers needed to top up premiums to guarantee that their mortgages can be paid off.
Pearl insisted that none of its endowment mortgage customers had failed to pay off a mortgage, and it did not expect to find any that were not on course. But its new homebuyers would be better off with a repayment mortgage and life cover, it said.
The main spur to Pearl's decision this week was the IoA conclusion that the low interest rate, low inflation environment meant endowment mortgages were unsuitable for all but those with a good credit rating and a willingness to shoulder some risk.
Pearl said its 3.5 million customers were typically mid- to low-income customers with a fairly conservative attitude to risk. "People who have endowment mortgages coming to maturity now have made returns of 12 per cent or 13 per cent but we can't promise that in the future," said Peter Carr, Pearl chief actuary, said.Reuse content