View more on these topics

Is now a good time to be discussing protection?

Simon Halifax-Senior Marketing Consultant (2)

By Simon Halifax, senior marketing consultant

For a few years now, mortgage advisers have probably been warning their clients that there’s only one direction that the interest rate is going and that’s up (well, I know mine has!). However, the financial landscape changed when the UK voted to leave the European Union last month and it wasn’t surprising when the Bank of England reduced the interest rate to 0.25 per cent the other week.

Naturally, this was not good news for savers but it will have been taken slightly better by those who are borrowing money. And in the UK there are quite a few of us, with the mortgage being by far the biggest debt taken on by the majority of households. There are an estimated 9.3 million households in the UK with a mortgage and the typical amount left to pay is £116,000*.

A case study

Looking at current house price data, we can calculate that a 0.25 per cent cut means roughly a £20 reduction in the monthly mortgage bill based on a 25-year variable repayment mortgage of £143,500, which is currently the average loan amount for a new mortgage. Now an extra £20 a month doesn’t sound very much – what does that buy you these days – two cinema tickets, a few drinks at the pub?

But if we link this extra cash back to the mortgage, and how we could be protecting it should something drastic happen, then that £20 could come in very handy indeed.

For example, depending on individual circumstances £20 a month could buy a family around £220,000-worth of life cover**. This would be more than enough to cover the typical mortgage loan shown above, as well as a bit extra to help with any other outstanding debts.

A conversation starter

There’s been more than enough coverage over the last few months about the EU and what the UK’s exit will mean, much of which is still unknown. But the potential short-term benefit of the interest rate cut could mean good news to many of your clients. Perhaps this could be the ideal time to revisit some of them, especially those on variable rates, to discuss their protection needs.

How we can help

We offer a range of tools, from sales aids to approach letters, which are specifically aimed at mortgage clients, as well as our range of calculators, including an affordability calculator.

This could be the ideal time to revisit certain mortgage clients to discuss their protection needs as they might find things a little bit easier with some extra cash in their back pocket.

 *Source: Council for Mortgage Lenders

**Source: Royal London quotes, based on a healthy 34-year-old woman or a healthy 39-year-old man, both non-smokers.


Generation Rent

By Denise Wond, marketing manager We’ve heard a great deal about Generation Rent in recent years but what does it actually mean for consumers and advisers and has the face of the typical renter changed? The picture is certainly more diverse than it used to be. Homeownership is at its lowest point in 30 years, […]

FCA interior 620x430

Firms face longer wait for FCA approval

Financial services firms are having to wait longer to gain FCA authorisation, with one firm waiting 74 weeks to be approved. In its latest key performance indicators report, published yesterday, the regulator says the average processing time for retail firm applications was around 25 weeks in the three months to June, up from around 23 […]


Banks say Brexit has not hit mortgage borrowing

Brexit has not hit mortgage borrowing demand, according to figures from the British Bankers’ Association. Gross mortgage borrowing this month is at £12.6bn, up by 6 per cent compared to July 2015. Net mortgage borrowing is also 3 per cent higher than last year. Approval of home purchases is down 19 per cent from July […]

Life cover for life

When someone mentions whole of life plans, most people will think of a niche product that serves as an inheritance tax planning tool for high-net-worth clients. And it’s really not surprising they’ve been pigeonholed in that waybecause before the arrival of RDR in 2013, that’s more or less exactly what they were. For advisers thinking […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm