Monthly Archives February 2009

Northern Rock Gathering Moss

It would be nice to follow that headline with something witty and clever about how Northern Rock hasn’t been rolling along with much momentum compared to previous years but that much is obvious to everyone.

Losses in the region of £46 Million have recently been reported in connection with repossessions.

According to moneyfacts that equates to an average loss of £19,350 per property.

The story is a bit ambiguous with the figures but if I’m reading it right that would suggest it has repossessed something like 46,000,000/19,350 = 2377.3 properties since 2001.

For one of Britain’s largest mortgage lenders that isn’t actually very many. Back in August 2008 it was reported that 28,658 repossessions occurred in the second quarter of last year. Or, depending on the source there were 155,600 repossessions in the first half of 2008.

That suggests Northern Rock has only repossessed a fraction of the total number in the UK.

So the figures surrounding UK repossessions are decidedly ‘hazy’ but what if instead of forcing people out of their homes, Northern Rock had partnered with a few housing associations, or perhaps the Government and ‘sold’ an equity share of each property facing repossession. That way they could have raised £46,000,000 instead of losing it.

Some sort of agreement between the homeowner and the Housing Association or Government could have been negotiated so that nobody was evicted but a nominal payment was made to slowly recover the debt.

Could this work for future homeowners? Should these ‘Buy and Rent Back’ companies be allowed to clean up during a time when people are struggling to pay their mortgages?

Questions, questions….

Halifax Withdraws Unemployment Protection

What’s this? Halifax undertaking a cost cutting exercise in a time when unemployment is on the rise? There’s a surprise!

From 8pm tonight, Halifax General Insurance will no longer be offering Accident, Sickness & Unemployment insurance.

I think it’s pretty obvious why they are doing this but surely some clever boffins calculate how many claims they’d get from how may policy holders to know how much they need to charge to make a profit?

Unemployment may well be on the rise but don’t banks and insurers plan for these kinds of eventualities?

Of course you will surmise, I have just made a small joke.

Existing policies will remain in place but new customers will have to find a cheaper alternative (as well as an insurer still selling cover!)

Of course, in a time when unemployment is on the rise, this kind of cover may well become more expensive. If more people claim the price will need to increase to cover the cost of paying those claims.

But there’s a familiar story of people who didn’t think they’ll need cover, only to find out they are exactly the type of person who could easily suffer a sickness that prevents them from working, have an accident that sees them laid up for weeks or lose their job due to an economic downturn.

So the truth is, not everyone who could benefit from Accident, Sickness & Unemployment cover actually has it.

Reason? Cost.

Cover that provides an income of between £700 – £1000 per month could cost £20 – £40 per month depending on age and occupation. Some insurers charge a lot more for people who don’t work in a nice cosy safe office environment.

Then there’s the people who have cover but may not even be eligible to make a claim.

Most insurers will want to see proof of either expenses or income before they’ll agree to pay a claim so anyone insuring more than they earn will be paying too much to have cover they can’t claim for.