Cost-of-living pressures leave homeowners cutting back on mortgage protection

Rising concern about financial resilience is being undermined by affordability pressures, with advisers reporting more clients reducing or cancelling mortgage protection cover.

Three in four advisers say their clients are more concerned about mortgage protection than they were 12 months ago, according to new research from MetLife UK.

The research found that 75% of advisers have seen concern about mortgage protection increase over the past year, with 22% saying clients are “much more concerned” and 53% reporting they are “slightly more concerned”. Just 18% said attitudes had remained unchanged.

However, despite greater awareness of the need for protection, advisers are also seeing more customers cut back on their cover as household budgets come under pressure.

More than three quarters (77%) said they had seen an increase in clients either cancelling protection policies or reducing their level of cover over the past 12 months. Of those, 25% reported a significant increase and 52% a slight increase, while 16% said there had been no change.

The research also suggests many consumers fail to act even when they recognise the need for protection. More than two fifths (43%) of advisers said clients often tell them they intend to arrange mortgage protection but do not go on to take out a policy, while 24% said this always happens following such discussions.

MetLife UK said the findings point to a challenge for the protection market, with growing awareness of financial risk being offset by ongoing affordability pressures that make it more difficult for some households to maintain or arrange cover.

Phil Jeynes, head of individual protection at MetLife UK, said: “Households across the UK continue to face difficult financial decisions, and our research highlights a worrying contradiction: people are increasingly aware of the need for protection, but some are having to make difficult choices as budgets remain under pressure.

“We get it. We understand that families are making difficult choices about where their money goes, and that protection has to compete with many other household priorities.

“That is why advisers play such an important role in helping customers understand the value of cover and make decisions that are right for their circumstances.”