FSA research says 2 million households face endowment mortgage shortfall
A new research commissioned by the Financial Services Authority (FSA) reveals that a majority of Britons who still have an endowment mortgage are straddled with an estimated shortfall of £7,200 each.
The research claims that there are almost two million people who are facing such a shortfall. The research titled “Mortgage Endowments – shortfalls and consumers action,” says that this figure equates to about 11 percent of all households in Britain. Out of these 11 percent households, almost 42 percent face a deficit amounting to over £5000, while the remaining face a shortfall in the region of £7,200. Overall, this was equal to a staggering £16 billion deficit.
Of these affected, 79 percent of the people said that they were “concerned” and 31 percent admitted that they were “seriously concerned” at the impact this shortfall would have on their retirement and pension plans.
The study also found that 69 percent of the people facing this shortage had taken some step to get out of the potential problems. They had ended up taking advice and also changing part of their mortgage to a repayment basis. Most of them admitted to making extra savings and capital repayments as well.
The FSA’s director of retail issues, Ms. Anna Bradley said that in the backdrop of this report she expected a surge in complaints from people, “We expect firms to act now to make sure they have adequate contingency plans in place for any increase in the volume of complaints,” she commented. However, the Association of British Insurers (ABI), was of the opinion that there had been considerable fall in the amount owed, “The efforts of the industry and others appear to be paying off. Many more people have taken action to address the possibility of a shortfall,” Chris Kenny of the association commented.
Consumer group Which? spokeswoman, Louise Hanson said, “Too many people who believe they have cause for complaint put off sorting out their endowment problems until it’s too late.” And consequently, they had to suffer from unwanted deficits.