REVIEW
PROTECTION
Worries around finances may affect mortgage market Kevin Carr Xxxxxxxxxx Protection review
xxxxxxxxxxxxxxxx, CEO and MD, xxxxxxxxxxxxxxxx Carr Consulting & Communications
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NS has just released the news that house prices increased on an annual basis by 9.8 per cent in March. On the face of it, this may seem positive news, but this is down from an increase of 11.3 per cent in February, and there is an expectation that this downward trend will continue in the coming months. Looking at the new LifeSearch Health, Wealth and Happiness index, it’s clear that Brits are becoming increasingly worried about their finances, and these fears are a significant factor in the cooling of the housing market. Almost three-quarters (72 per cent) expect to be financially worse off this year. On average they believe they will be more than £3,000 out of pocket. This equates to over £250 a month, a substantial amount of money that is likely to force people to think carefully and decide where best to spend their money and what to cut back on. The survey shows there is a rising fear about finances – 41 per cent fear rising bills, 24 per cent fear lack of savings, and 16 per cent fear not being able to pay their bills. This is not a climate in which people will make quick, bold decisions. They will be thinking about what will benefit them and their families in the long run. The uncertainty around rising prices, the war in Ukraine, and the general economic outlook is making people think twice about committing to large purchases, such as moving house or buying a new car. Thirteen per cent of all UK adults said they had put off big expenditures in the last year, with this
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MORTGAGE INTRODUCER JUNE 2022
number rising to 19 per cent among those aged 35 to 44. This is particularly true for those at the lower end of the pay scale. More than a quarter (28 per cent) of those earning £20,001 to £30,000 a year have delayed making these big purchasing decisions. It’s likely that this will affect the bottom end of the housing market most in the coming months, with potentially fewer first-time buyers willing to take the plunge on buying a home. In turn, this is likely to have a knock-on effect higher up the property ladder, with fewer people looking to move upwards. PROTECTING WHAT MATTERS MOST
This gloomy picture around finances is also reflected in the happiness and health levels in the index, which are at their lowest levels in a decade. The pandemic has had a massive impact on British life, with many people feeling worse off than they did before. The bullish feelings shown in the 2021 survey have evaporated, replaced with a sense of uncertainty about the future. The pandemic revealed the fragility of our health. It showed that anyone, no matter how fit and healthy, could be struck down with an illness that could seriously affect their way of life. This seems to have particularly hit home with the younger generation, with six per cent of 18- to 34-year-olds considering taking out life insurance and income protection in 2021. These numbers may seem small, but they are significantly higher than in the
past. With a squeeze on finances already happening for many, people are thinking carefully about how and where they spend their money to protect themselves and their families. More and more, they will be looking to mortgage lenders for support and reassurance – first around how they can best protect their payments from rising interest rates, and then regarding how they can protect themselves. NEWS ROUND-UP
• Legal & General paid out almost £800mn in individual protection claims during 2021, benefiting 16,890 customers. • According to new research from CIExpert, 67 per cent of mortgage and protection advisers will continue to conduct more than half of their client meetings virtually this year, while around one in five (22 per cent) noted that they would carry out all client meetings online, despite the removal of COVID-19 restrictions. • Aviva’s protection and health business posted a 10 per cent increase in sales to £696mn in Q1 2022, up from £630mn in the same period last year. • Shepherds Friendly has launched a simplified application process for income protection as part of a wider strategy to offer a more streamlined application process to advisers. • Aegon UK has launched a new adviser dashboard that brings together all protection applications in one online platform. M I www.mortgageintroducer.com
