Consumer group calls for regulations on mortgage advice
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Your support makes all the difference.The Government was today urged to introduce statutory regulations to cover mortgage advice in the wake of growing unease of thousands of home owners sold endowment mortgages.
The Government was today urged to introduce statutory regulations to cover mortgage advice in the wake of growing unease of thousands of home owners sold endowment mortgages.
The Consumers' Association said regulations were needed to address gaps in the current system and the issue of endowment mortgage "bias" by salesmen.
It said many borrowers were still being given outdated and misleading advice about the merits of endowment mortgages which usually generate seven times more commission for salesmen than repayment policies.
The association called on mortgage lenders still offering endowment mortgages to "urgently review" their position and publish details on how many such policies actually lapsed after four years.
It also said it wanted to see the Financial Services Authority update guidelines for mortgage providers on the pros and cons of repayment and endowment policies "so they no longer have any excuse to give outdated and misleading advice".
The association's calls coincided with the release of the latest Which? magazine which found claims that 40% of new mortgage borrowers are still being sold endowment mortgages.
Neil Walkling, principal researcher at Which?, said: "endowment mortgages are no longer a sensible option for new borrowers.
"Anyone with an endowment already should certainly stick with it but new borrowers should steer clear of these risky, inflexible and old-fashioned products."
endowment mortgage-holders do not repay the loan itself with monthly payments but instead pay into an investment fund which in theory will mature with a large enough sum to pay off their loan.
Concern is mounting that endowment funds are not growing fast enough and thousands of homeowners will not receive enough cash to pay for their homes.
Earlier this week, Trade and Industry Secretary Stephen Byers said an investigation could be launched into endowment mortgages and it could be as large as the inquiry into the pensions mis-selling scandal.
Mortgage lenders have dismissed allegations that there is widespread mis-selling of the endowment policies.
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