Endowment mortgages are one of the most controversial products on the market : their history is thick with claims of mis-selling. The City Watchdog, the FSA (Financial Services Authority), reports this week that the cost of claims related to mis-sold endowment mortgage loans has soared to £2billion between 2004-2005.
The FSA said that compensation payout is now £2.2billion, following massive increases in the amount of complaints last year. Endowment mortgages were very popular throughout the 1980s and 1990s, providing buyers with interest-only mortgages that had the capital covered with an investment plans. The upshot has been the failure of many of these plans to deliver, leaving thousands of homeowners short on repayment capital.
The number of complaints continues to spiral upwards, with large increases every year. In the 12 months running up to April 1st 2006, almost 800,000 people complained, leading to compensation payments of £945 million. Endowment mortgages have been one of the most scandalous and damaging products for the mortgage market .
In some instances, pension-linked or endowment mortgages can be a wise choice, and in principle they make sense. However, when investment plans suffer and do not perform, the homeowner is left in a potentially financially damaging position. It seems many endowment mortgage holders are rightfully aggrieved.
Endowment mortgage claims rising
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Endowment mortgage claims rising
Mon, 31 Jul 2006
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