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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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 Posted: Tue May 29, 2007 10:40 pm Post subject: Consumers paying up to 10K over the odds for MPPI |
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Homeowners who buy their Mortgage Payment Protection Insurance (MPPI) from High Street lenders could be paying �10,000 more in premiums than they need to, according to research undertaken by independent provider, British Insurance.
Posing as a 30 year-old couple looking to protect mortgage repayments of �700 a month over 25 years, representatives recently contacted ten of the UK�s top lenders and found that on average, consumers are shelling out �7,119 more than necessary. The most expensive lender, Nationwide, quoted �7.89 per �100 of cover, which over the lifetime of the loan equates to premiums of �16,569 � nearly three times more expensive than British Insurance at �2.75 per �100 or �5,775 over 25 years.
British Insurance Managing Director Simon Burgess comments: �This is another example of blatant profiteering at the expense of the consumer - how can the Nationwide justify charging �10,794 more for cover that is inferior to mine? These premiums are for a �100,000 mortgage, way below the UK�s average home price of over �200,000 � so imagine the savings for those with a higher loan.�
Payment Protection providers are already being investigated by the Competition Commission, and these latest figures, Simon believes, add further weight to the Office of Fair Trading�s allegations that lenders are working to the detriment of consumers.
He continues: �Research from the Royal Institution of Chartered Surveyors reveals that house prices have risen for 17 consecutive months. Lenders obviously see this as the �green light� to follow price trends and inflate their MPPI premiums accordingly. You�d think that with the recent interest rate rises and first time buyers struggling to get a foothold on the property ladder, lenders would be sympathetic to the needs of their customers and help them protect their mortgage repayments with affordable cover.
I urge consumers to check their premiums. We all shop around for our home and motor cover, so why not mortgage repayments? I�m saddened by these findings. Not only are my premiums competitive, but I offer tax free benefits from day one, options for accident/illness or unemployment only cover and a monthly contract that can be cancelled at any time.�
Further information on payment protection insurance can be found at www.britishinsurance.co.uk. |
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