Its findings showed that first-time buyers are feeling the pinch of higher interest rates with mortgage affordability at its worst level for 16 years. The trade body’s director-general, Michael Coogan, was positive that at least ‘those first-time buyers who are getting a foot on the property ladder are opting for fixed rate products’.
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I don’t disagree. However, I am discouraged by the absence of discussion about mortgage payment protection insurance (MPPI) in amongst all this talk about the precarious nature of the housing market. While fixed rate products will protect consumers against rising interest rates, they provide no protection against changes in personal circumstance. First-time buyers, more than any other category of home owner, are the least likely to have sufficient savings to cope with the loss of employment, illness or injury.
The Competition Commission’s investigation into payment protection insurance (PPI), including MPPI, has spurred on a vast amount of negative media coverage about these products. The resulting effect is that take-up is falling. I agree that the PPI industry needs to make changes and improvements, but this should not obscure the important role that MPPI plays as a safety net in the context of sustainable home ownership and the British economy.
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No one needs reminding of the housing market collapse of the 1990s. We’ve been lucky for the last 15 years – the economy has been kind and the safety net has not been tested. But what if it was? We need to make sure the core value of MPPI is not forgotten and is kept in the public eye.
Adrian Fowler
Head of marketing
Assurant Solutions
