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Catch up with the latest press releases from LV=

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Home-Loving Brits Would Take Drastic Steps To Keep The Keys To The Castle.

Press release: 19/08/2009

  • Two-thirds of UK adults (67%) would be devastated never to own their home.

  • Half of homeowners (51%) would take a second job to hold onto their home.

  • Only one in ten (9%) have protection to pay their mortgage and other household bills over the long term, in the event of loss of income.

Despite battered house prices and increased repossession levels [1], the nation’s home-owning instinct remains stronger than ever according to research [2] carried out for insurance, investment and pensions group LV=. For 14 million British adults (28%) [3], the idea of never owning their own home is too terrible to consider, while a further 39% say the prospect would make them miserable.

This passionate attachment to property is further confirmed by the drastic lengths that homeowners would go to in order to keep the keys to their castle. Just over half (51%) say they would take on a second job to help meet their mortgage payments, and four in ten (43%) would withdraw some or all of their life savings to make ends meet. Almost a third (29%) would even be prepared to sell off the family silver.

Yet fewer than one in ten homeowners (9%) have insurance that would pay their mortgage repayments and other regular outgoings over the long term, in the event of a sudden loss of income.

Taking in a lodger

One in five homeowners (19%) would be prepared to take in a lodger to help pay the mortgage and almost as many (18%) would rather go cap in hand to friends than surrender the keys to their castle. One in ten (12%) say they would move out and rent their property to someone else, if that was necessary to be able to cling on to ownership.

Chris McFarlane, LV= head of protection, said: “The financial turmoil of the last year has done nothing to dampen our national obsession with home ownership. It’s fascinating to note just how far people would go to avoid having to give up the keys to their castle.”

The resistance to losing their home is strongest among those who already own a property – eight out of ten of these people (79%) say the prospect of losing their home makes them miserable or is too terrible to consider.

MPPI protection is limited

Although just over a third of homeowners (37%) have some kind of mortgage protection in place, most of them have simple mortgage payment protection insurance (MPPI), which often only covers mortgage payments over the short term. Less than one in ten homeowners (9%) have more comprehensive income protection insurance that could cover their mortgage and other living expenses over the long term not just for a limited period.

Chris McFarlane continued: “We need a sea change in the way we view threats to our homes. We install locks and alarms because we fear burglary and we have buildings insurance to protect the property structure. But typically we don’t protect the regular income that we need to be able to maintain over the long term to pay for our homes and other living costs. Proper income protection can cost as little as 50p a day [4], which in the current climate should be food for thought for everyone.”

Home-owning dream

Tougher lending conditions have not dented the home-owning dream among the nation’s under 35s, with three-quarters (74%) saying they can’t imagine not buying a home at some stage in their lives.

Interestingly, existing homeowners in this younger generation are more prudent, with 43% having some kind of protection for their mortgage payments compared with an average of 37% across all age groups. However, two out of three of these younger homeowners (65%) have opted for MPPI cover [5], that often only covers payments for a limited period.

Chris McFarlane continued: “It is encouraging to note that younger homeowners are more aware of the need to protect their mortgage payments. But they need to be very clear about what their cover includes and whether the replacement to their regular income would dry up after a short time, as MPPI often does. Protecting a breadwinner’s loss of income over the long term now, rather than reacting only when the worst happens, would make just a modest impact on most people’s finances, yet it would provide vital assistance if needed.”

As an example, a 29 year old male non-smoking office worker could buy cover worth £1,000 a month (payable after 3 months) to age 60 for as little as £15.20 a month. This would provide replacement income potentially amounting to over £350,000 over time, for around the cost of a pint of milk a day [4].


LV=

LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs over 3,800 people, serves around 3.6 million customers and members, and manages around £7 billion on their behalf. We are also the UK’s largest friendly society (Association of Friendly Societies Key Statistics 2008, total net assets) and a leading mutual financial services provider.

LVFS is authorised and regulated by the Financial Services Authority register number 110035. LVFS is a member of the ABI, AMI, AFS and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.


Notes

[1] There were 11,400 repossessions (equivalent to one mortgage in 1,000) by first-charge mortgage lenders in the second quarter of this year, according to the Council of Mortgage Lenders. This compares with 10,000 in the second quarter of 2008. Source: Council of Mortgage Lenders Press Release 14 August 2009.

[2] Opinium Research carried out an online poll of 2,007 British adults from Tuesday 9th June to
Friday 12th June 2009. Results have been weighted to nationally representative criteria.

[3] 28% of respondents say the idea of never owning their own home would be too terrible to consider. Based on total adult population of 48,772,161 (Source: ONS population projections, 2009), this equates to 13.65m people.

[4] Premium cost of £15.20 a month with an LV= Income Protection policy, based on a male non-smoking office worker, aged 30 next birthday, three months deferred, monthly level Income Protection cover of £1,000 to age 60. Source: LV= Flexible Protection Plan - Income Protection. Correct as at 6 August 2009.

[5] 43% of 18-35 year old homeowners have some form of mortgage protection and 28% of these have MPPI, therefore 65% of those who have cover have MPPI (28 is 65% of 43).