Halifax raises cost of mortgage cover

THOUSANDS of Halifax Building Society borrowers were notified last week that the cost of their mortgage protection insurance is to rise by 50 per cent from October.

Substantial increases have been demanded by underwriters, worried by the continued rise in unemployment, and losses incurred by the insurance industry.

Halifax argues that borrowers are being provided with an improved service, for example a free Redundancy Advice Helpline to advise unemployed borrowers on debts.

Halifax's premiums are to rise from pounds 4 a month per pounds 100 cover to pounds 6 per pounds 100 for those borrowers with policies arranged with GA Insurance, dated between 1986 and September 1991. Subsequent policies have been underwritten by the Financial Insurance Group at a premium of pounds 5 per pounds 100, and these will now also be priced at pounds 6 per pounds 100.

The Association of British Insurers said that most premiums had settled at around pounds 5 or pounds 6 per pounds 100. 'They have been going up over the last four or five months. Some insurers have increased the time needed with the last employer in order to qualify, and reduced the length of the payout, so the increase on premiums has not gone up so much, but the cover has reduced. It's a trade-off,' a spokesman said.

In April, Bradford & Bingley Building Society raised its premiums while reducing its cover, and now charges pounds 6 per pounds 100 - the same as Abbey National.

Woolwich set its premiums at pounds 5.50 per pounds 100 last November and has no plans to increase them.