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Payouts and policies rise in 2022

Insurers supported people experiencing bereavement, illness, or injury
to the tune of £6.85bn in 2022, according to latest figures from the
Association of British Insurers (ABI).

Upwards trend

This total includes payouts from group and individual protection policies.
Individual policies paid out £4.64bn on life insurance, income protection and
critical illness claims, while group policies, which provide protection products
through an employer, paid out £2.21bn.

Protection when it’s needed

In total, some 287,000 individual claims were paid, with the average payout
from these policies increasing for the third year in a row to £15,448, a 9%
boost.

Over 15,900 people claimed against individual income protection policies in
2022, another 9% increase from the previous year. The total value of these
claims also rose by 22%. For the second consecutive year, the main cause of
individual income protection claims (34%) concerned musculoskeletal issues.

Acceptance rates stay high

The number of new individual claims paid has consistently been around 98%
since 2017. More than half of declined claims resulted from customers who had
not told their insurer key details about themselves or their circumstances.

As with all insurance policies, conditions and exclusions will apply

Jake

August 17, 2023

Market update

2022, ABI, acceptance rates stay high, critical illness, Income Protection, life insurance, Payouts, policies, Protection, protection when its needed, rise, upwards trend
Income Protection – for everyone

Interesting data has highlighted that although over 50% of married
couples rely on both their incomes to cover the expense of their monthly
costs, just 13% have purchased income protection (IP). This leaves a
huge number of couples and their families vulnerable to financial
shocks.

And don’t forget stay-at-home parents

In addition, the research cautioned that when applying for protection cover,
people tend to focus too much on the breadwinner, overlooking the contribution
of stay-at-home parents. With 28% of stay-at-home parents saying their partner
would have to take time off work if they were unable to look after their children
due to illness or injury, the impact on household financial resilience could be
significant.

Times have changed

It is vital that people appreciate the potential impact of not having the
appropriate cover in place. Having IP means you know you’ll always have money
coming in if you were to lose your income for medical reasons (physical or
mental, illness or injury). Everyone’s circumstances are different, whether you’re
single, married, children, no children, working or caring, we adopt a tailored
approach to protection requirements, get in touch, we can help.

As with all insurance policies, conditions and exclusions will apply

LV, 2023

Jake

August 17, 2023

Market update

2023, Income Protection, interesting data, IP, LV, Stay at home parent, Times have changed
Considering choosing a ‘mammoth mortgage’?

A standard mortgage used to run for 25 years but there is a growing
trend for so-called ‘mammoth’ loans spread over up to 40 years as first-
time buyers and movers opt for lower monthly payments.

A dramatic increase

According to UK Finance, the last two years have seen a dramatic increase in 40-
year mortgages. In February 2023, 18% of all first-time buyers opted for a
mortgage term of 35 years or more, compared to 8% in February 2022.
According to Moneyfacts, 67% of all mortgage products currently available have
a standard maximum term of up to 40 years.

At what cost?

The main benefit of borrowing over an extended period is that it helps with
affordability, but at what cost? You’ll end up paying more interest overall.

A longer term may allow you to borrow more, so you’ll need a smaller deposit.
However, you’ll need to be aware that the equity in your home won’t grow as
fast as you’re paying the debt back more slowly.

You’ll also need to consider whether a longer mortgage term will mean that
repayments carry on into retirement.

We’re here to help

If you’re thinking of extending your current mortgage to reduce your monthly
outgoings or you need advice on a new mortgage, it’s always best to speak to an
adviser.

Your home may be repossessed if you do not keep up repayments on
your mortgage

Jake

August 17, 2023

Market update

40 years, at what cost?, increase, mammoth mortgage, Mortgage term, we’re here to help
A summer of ups & downs

Summer is here and activity in the housing and mortgage markets is
hotting up… and cooling down at the same time. Latest data from the
Royal Institution of Chartered Surveyors has positive news on housing
supply, with a run of thirteen successive negative monthly readings for
new instructions coming to an end with a positive reading in May. This is
the strongest reading for new listings since March 2021.

House price outlook

House price growth dipped in May and notably, the annual rate of growth fell to –
1.0%, marking the first time since 2012 that house prices have fallen year-on-
year. It remains to be seen which direction the market will take in the second
half of 2023.

Some are predicting that many homeowners will be forced to sell up when their
current fixed-term mortgage deals end, which would see a boost in supply that
might reinforce the downward price movement. Analysts are also suggesting
that first-time buyers (FTBs) could be delaying their homebuying plans in the
hope that mortgage rates or house prices are poised to fall sharply before too
long.

Bank Rate

Meanwhile, the Bank of England’s (BoE’s) Monetary Policy Committee (MPC)
increased Bank Rate from 4.5% to 5% in June. Borrowing costs are now at their
highest level since 2008. Those with tracker or variable rates have seen
immediate higher repayments and those on fixed rates are contemplating their
next move.

Mortgage Charter

Around 85% of lenders operating in the UK’s mortgage market have signed a
government charter agreeing to support borrowers following a meeting with the
Chancellor to discuss the impact of rising mortgage rates on homeowners.

The charter includes allowing borrowers to contact their lender for help without
impacting their credit file and enabling borrowers who are up to date with
payments to switch to a new mortgage when their fixed term ends without
another affordability check. The ability to switch takes effect from 10 July and
will be available six months before a borrower’s fixed term period expires.

Lenders will also help borrowers to plan for when their rate ends and offer
support to those struggling financially. This may include extending their
mortgage term to reduce payments, switching to interest-only, or temporarily
deferring payments.

Return of the 100% LTV mortgage

One especially noteworthy development is the launch of a new mortgage product
that allows FTBs to take out a loan on the full value of their home. The 100%
loan-to-value (LTV) mortgage is exclusively for current renters and depends on
their being able to prove a track record of timely rent payments. Otherwise, 100% LTV mortgages generally require a guarantor to cover any missed
repayments.

Your home may be repossessed if you do not keep up repayments on
your mortgage

RICS, Halifax

Jake

August 17, 2023

Market update

100% mortgages, bank rate, house price outlook, market, mortgage, mortgage charter, mortgagemarket, rates

Payouts and policies rise in 2022

Income Protection – for everyone

Considering choosing a ‘mammoth mortgage’?

A summer of ups & downs