Forum Brief: Mortgage Endowments

The number of people whose endowment mortgage will not pay off their home loan has increased to nearly two-thirds over the past 12 months, according to new figures from the Association of British Insurers.

Forum Response: Association of British Insurers

A spokesman for the ABI told ePolitix.com: "The Association of British Insurers today reported that scheduled despatch of the second set of letters informing mortgage endowment policy holders of the progress of their savings plans was now well underway.

"These letters inform policyholders of the latest projections of their policies, and indicate whether they should take action to deal with any possible future shortfall resulting from current predictions of future interest rates. All holders of endowment policy mortgages are benefiting from lower interest payments which, in many cases, balance lower investment returns.

"People who receive a letter suggesting that they take some action should seek advice from a financial adviser. Endowment policies are long-term savings policies and there are a number of practical options open to people with a projected shortfall. Interest rate cuts in recent years have meant an increase in the amount of money available in monthly household budgets.

"Policyholders with a projected shortfall will often be able to invest the money saved from lower interest rates to increase savings to address any shortfall on the endowment."