The high perceived cost of mortgage payment protection insurance (MPPI) puts too many homeowners off from taking out this crucial form of security against debt.
Recent research by the charity Advice UK found that, while mortgages constitute 83 per cent of consumer borrowing, only 17 per cent of that mortgage holders also take out MPPI.
Separate data published by the Council of Mortgage Lenders (CML) has found that home repossessions rose by 70 per cent in 2005 as against the previous year.
Furthermore, historically low interest rates are leading many families to extend their mortgages in order to pay off other debts or to spend on cars, holidays and other luxuries.
MPPI specialist Paymentcare has warned this week that public perceptions of its sector need to be addressed.
Spokesperson Shane Craig stated: "The situation gives cause for concern as so few homeowners have taken out any protection for their mortgages to cover them if they have an accident or are sick or lose their jobs."
Advice UK's report suggests that the MPPI offered by the big banks can be up to 70 per cent more expensive than that available from specialised brokers.
"At present, all MPPI offerings look like they are being tarred with the same brush, as homeowners appear to take the view that cover is only available at rip off prices set by the major lenders", Mr Craig told Mortgage Introducer.
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