Mortgage protection - Plight of the homeowner is ignored

When the current financial crisis first erupted, the Government came up with imaginative proposals to rescue the banks.

The idea of guaranteeing bank deposits was not so much to protect depositors as to prevent runs on the banks that would have brought them crashing down.

It was a perceptive move for which the Finance Minister deserves credit. Many questions have been raised about the level of risk that the Government has been incurring to help out the banks with the National Assets Management Agency (NAMA). Billions are being put aside to rescue the banks and the property speculators, but this is also probably necessary to protect the overall economy.

It seems that Government is preoccupied with rescuing the bankers and the speculators who were primarily to blame for what has happened, but little consideration seems to have been given for the plight of the innocent people who have been caught up in the mess.

In the midst of the property boom, prices rocketed and now people are saddled with mortgage repayments that they might never have incurred if they had known the true state of things, or if the various regulators had been doing their jobs properly.

Everybody is being hit by the current depression, but it seems as if the authorities are only worried about the bankers and the speculators. Homeowners are finding it necessary to cut back on other payments in order to keep up their mortgage repayments and there are indications that interest rates are going to increase in order to help the banks with their cash-flow problems.

There is evidence that homeowners are reviewing their finances by cutting back on their life insurance cover and mortgage protection insurance in order to keep their costs to a bare minimum.

A spokesman for the Irish Insurance Federation has warned that mortgage protection is a legal requirement, so people should be careful in reviewing their policies to ensure that they have proper protection for the lifetime of their mortgage.

Yet there have been suggestions that people could save up to 25% by shopping around. A number of factors have contributed to lowering the cost of life cover in recent years. Obviously some of this has not been passed on to consumers, because they have not requested that their policy be reviewed to determine if there is better value elsewhere in the market.

Often when people query the cost of insurance, they find they can get the same cover from another company for significantly less. Sometimes the original company then cuts the premium in order to match the lower quotation offered by the competitor.

The Government needs to be more mindful of the need to protect not only the bankers and the speculators but also the plain people of Ireland who are being taken for a ride.