LPR mortgages Blog

Critical Illness Claims Payouts Rise 4 Years In A Row

2010-03-10 15:09:40

Legal & General paid 93.6% of critical illness claims in 2009, a figure that has increased every year since 2005, when it was 79%.

Only 6.4% of claims were declined last year – one of the lowest ratios in the industry – of which 1.8% were for non-disclosure and 4.6% were for not meeting the policy definition. In total, £152 million was paid out to 2149 individuals and families, making their lives easier at an extremely difficult time.

Bernie Hickman, Managing Director of Protection at Legal & General said:

“We're in the business of paying claims and that should be the main purpose of any insurance provider. We should be there when people need us most, so to have to decline 148 claims during the course of last year is disappointing.

"We have worked tirelessly to combat non-disclosure and we have succeeded in reducing these declined claims year-on-year. However, in an ideal world, no policyholder would ever have a claim declined. If you suffer from an illness or condition that is covered on your policy and you have answered all the questions fully at the time of applying, then we will pay out. This is the way it should be for everyone.

"Protection offers added peace of mind and is good for individuals, for their families and for the State. Fully protected people are less likely to suffer financial hardship, less likely to rely on sick pay and benefits and less likely to require help and handouts from friends and family. Paying out on critical illness claims is absolutely essential to our financial well-being as a society.”

Bernie Hickman chairs the ABI committee that, in 2008, brought about the introduction of the ABI Protection claims code. The new rules resulted in a vast improvement for customers across the industry and an improvement in claims ratios from all providers. This has been a vital step in restoring consumer trust in the industry. I

n December 2009, the Law Commission recognised the work done within the protection industry and set out proposals to give legal status to this claims code.

Further critical illness claims data:

- Average payment was £70,731

- Average age of claimant was 44

- Most common conditions claimed for were Cancer, terminal illness, Heart Attack, Stroke and MS

Remortgage Activity Begins To Recover

2010-03-10 15:08:18

The John Charcol Index revealed that the market share taken by remortgages increased for the third month running and the dramatic fall in the take up of fixed rates since the middle of last year has come to an end. The main stories from the John Charcol Index for the first two months of 2010 are the beginning of a revival in the remortgage market and the stabilization of fixed rate take up, but at the very low level of around 20%.

The remortgage market returns Ray Boulger of John Charcol, comments: "Purchases took only 47.3% of mortgages sold by John Charcol in February, down from a peak of 58.5% in November. The February figure is the lowest market share taken by purchases since April of last year and provides evidence that activity in the remortgage market has bottomed out. "After the normal seasonal lull in December John Charcol placed significantly more business in January and February, adding to the other evidence that the downturn in mortgage approvals and lending reported by the Bank of England and the Council of Mortgage Lenders for January will be reversed when the February figures are released.

"Both purchase and remortgage activity has increased this year, but remortgages have increased more. However, detailed analysis of the figures shows that all of the increase in remortgage activity over the last two months is due to a particularly sharp increase in Buy to Let remortgages. "Therefore, although mortgage rates have been steadily improving over the last few months, and in the residential market there are now even decent rates available up to 85% LTV - which makes remortgaging worthwhile for many more people - it is too early to be confident of an ongoing increase in remortgage activity.

Nevertheless there are good reasons to think that the decline in remortgage activity has reached its nadir for the following reasons: - More competition and a modest reduction in some funding costs for lenders resulting in lower rates for both new fixed and tracker mortgages. - Several building societies increasing their SVRs, which also focused attention on the fact that many SVRs are over 5%. - A significant improvement in the rates and choice available to borrowers with only 15% or 20% equity in their property.

- The bounce in property prices since the low nadir early last year, increasing some borrowers' equity sufficiently to make remortgaging worthwhile. Most, and maybe all, of these factors are likely to continue to influence the market in 2010.

Whilst the 80/20 split between variable and fixed may seem dramatic, trackers have certainly offered the better value since the middle of last year, although a caveat now is that the political risk, particularly of a hung parliament, can't be ignored. "It is also worth noting that due to the market reassessing the future path of interest rates the gap between fixed and tracker pricing has narrowed recently. If this trend continues fixed rates may well come more into the reckoning in the not too distant future."

Government Must Support Equity Release

2010-03-09 15:53:24

The Government must go further in its support for equity release as a key retirement funding solution. An All Party Parliamentary Group led by Baroness Hollis of Heigham, which was convened last week to discuss equity release providing a retirement funding source, said Government attention must focus on the need to increase public trust in equity release.

The Group said that a high standard of advice was needed to support the growing demand for equity release. Andrea Rozario, director general of Safe Home Income Plans, said: "Of course, developments must be made and challenges lie ahead for providers, distributors, government and consumers alike - but the debate produced by this Group is the first vital step in bringing equity release much closer to the heart of Government thinking."

Mortgage Products At A 15 Month High

2010-03-05 15:05:54

The number of mortgage products available to brokers is at its highest since December 2008, according to figures from Mortgage Brain. The total number of broker products listed on Mortgage Brain’s sourcing system hit 4,876 as at March 1, up 9% from the 4,457 available products in February.

Broker product numbers have now rising for eight consecutive months. .Product availability has improved by 79% compared to this time last year, and is up by a massive 95% from six months ago. The number of fixed rate products has continued to rise, up 8% last month to reach 2,884 products.

Variable rate products are up slightly, going from 359 in February to 369 currently. An increasing number of trackers have been launched in light of the record low 0.5% Bank of England base rate, which has now stayed stagnant for a year.

Long-term analysis shows the number of trackers has shot up 200% compared to the same time last year.

There are 1,623 trackers available to brokers, up from 1,434 in February. Mark Lofthouse, CEO of Mortgage Brain, says: “The current, mid and long-term analysis of our data is really starting to show a clear picture of market stability and the forward movement that is been made in the mortgage industry. “We are now regularly seeing increases in product availability in all areas, which is particularly encouraging.”