Pressure is likely to mount on mortgage holders to buy mortgage payment protection insurance cover, as leaked details of talks between debt charities and mortgage lenders lead to increased speculation of an additional burden on homeowners.

Media speculation that record levels of missed mortgage repayments and the worrying debt mountain shouldered by UK homeowners will prompt the introduction of compulsory MPPI could give High Street banks a major payday, said

Chief executive of Moneynet, Richard Brown, explained: “Making this insurance compulsory would effectively mean substantial additional monthly costs would be passed on to homeowners, even if the Treasury demand that lenders and mortgage companies provide the cover as a bolt on to protect borrowers against falling into deep debt should they lose their jobs or be unable to work.”

At present barely a quarter of homeowners have an PPI policy in place on their mortgage, and currently have to wait for nine months before qualifying for any State help with the mortgage by way of Income Support Mortgage Interest payments.

“Even then, they are only given assistance towards the interest on their repayments, so for many people it makes sense to arrange cover,” said Brown.

Browm added: “If lenders are forced to foot the bill they will simply factor in the cost of the insurance by way of higher mortgage repayments.

"Ultimately, it is the homeowners who will lose out in order that the Government can boost its coffers through saving on paying out mortgage benefits.”

Article in CreditControl .co.uk

September 20th, 2006