Calls to ban endowment mortgages set to grow after actuaries' report
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Your support makes all the difference.The controversy over the alleged mis-selling of endowment mortgages is likely to be rekindled next week with the release of a report by an Institute of Actuaries working party, which concludes that many endowment polices offer poor value.
The controversy over the alleged mis-selling of endowment mortgages is likely to be rekindled next week with the release of a report by an Institute of Actuaries working party, which concludes that many endowment polices offer poor value.
The report will provide ammunition for pressure groups such as the Consumers Association, which claim there has been massive mis-selling of endowment policies and their sale as a repayment vehicle for mortgages should be banned.
Most of the bad publicity surrounding endowment mortgages focuses on falling investment returns. These have left some borrowers facing short-falls which would leave them unable to pay off their mortgages.
However, the report concludes that the investment performance is less of a concern than the high charges levied by the insurance companies that sell the bulk of endowment policies. It maintains that these must be cut to restore confidence in them.
Endowments linked to interest-only mortgages were widely sold in the 1980s on the basis that the good stock market returns available would not only guarantee thatthe mortgage would be paid off on maturity but that the borrower would also end up with a lump sum on top.
Many of these expectations have been disappointed as a result of lower inflation and lower nominal stock market returns.
Allegations of mis-selling of endowment policies are a key reason behind the pressure on the Government to bring mortgages under the supervision of the Financial Services Authority.
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