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Homeowners turn against endowments

Endowment mortgages have fallen out of favour with Brit-ish homeowners, according to a new report which shows that nearly eight out of 10 would now choose any type of mortgage other than an endowment.

The report, entitled Sold Short? Attitudes to mortgages and endowments in Great Britain, from Tep provider Surrenda-link, also reveals that four out of 10 endowment policyholders are concerned that their policy will not reach its intended target valueon maturity.

Surrenda-link is calling for life offices to take heed of this statistic and says it is in line with ABI figures showing nearly 3.5 million families in the UK face a shortfall on their mortgages.

When asked what type of mortgage product they would now choose, 61 per cent of those questioned in thesurvey said they would choose a repayment mortgage ins-tead of an endowment.

Only 4 per cent said they would chose a current account mortgage.

Surrenda-link marketing manager Matthew Roche says this response may indicate either discomfort with or lack of education about current account mortgages.

The research also shows that 62 per cent of endowment holders would sell their endowment policy on to a third party rather than surrender it to the original provider if they were disposing of it now.

Surrenda-link has the biggest share of the UK traded endowment policy market, with a turnover for this year which is estimatedto be around £115m.

Roche says: “The endowment-backed mortgage isnow clearly unpopular with the British public.

“The security of the repayment mortgage now appears to be well established as the most popular method for housebuyers.

“The loss of credibility for the endowment-backed mortgage is clearly leading to its decline in popularity.”

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