Some 61% of endowment mortgage holders contacted in a mass mailshot by the Association of British In...
Some 61% of endowment mortgage holders contacted in a mass mailshot by the Association of British Insurers (ABI) may not see returns sufficient to cover their mortgage.
The dispatch of more than 10 million letters warning investors of the shortfall is under way, the ABI said. So far, 1.25 million letters have been sent, of which 39% were green letters, telling investors they were on track to pay off their mortgages, and 26% were amber, suggesting extra payments into the endowment policy were advisable. The final 35% were red, indicating the policy was unlikely to pay enough on maturity to cover the cost of their mortgage.
The letters give endowment mortgage holders projections of likely maturity value, with green letters indicating 6% annual growth will be enough to cover the mortgage.
Without further payments, those receiving amber letters need annual growth of 6% to 8%, while those receiving red letters need more than 8% per year. The red letters state there is a high likelihood of the maturity value being substantially below that originally projected.
Acting on behalf of its members, the ABI had earlier agreed with the FSA that letters were to be sent out over a three-year period up to June 2004. Between April 2000 and June 2001, some 10.7 million letters were sent.
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