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Should government set up a Mortgage Protection Fund?

Journalist: Kate Steiner-Dicks, Freelance

ended 02. February 2024

The Liberal Democrats are calling on the Government to introduce an emergency Mortgage Protection Fund to support struggling families at risk of losing their homes, paid for through reversing Conservative tax cuts to the banks. 

Mortgage and tax experts: 

  1. Do you think such a fund is a good idea?
  2. How would someone even be eligible to apply to such a fund? 
  3. Can tax cuts even be reversed?
  4. Would lenders welcome such a fund and if so, how would it impact mortgage eligibility?

9 responses from the Newspage community

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Editor
Michelle Lawson
Director at Lawson Financial
In short no! There are protection products available that people can take out to cover most eventualities. I think the public need to be educated more around the products available and to start taking responsibility for their actions and should not expect others to pick up the bill. Home ownership comes with a duty to ensure you can maintain a mortgage. Some people may not be able to get protection products for health or other reasons in which there could be an argument for such a thing however this, in my opinion, is more about the insurers innovating products in a better way to offer cover to all. UK plc is broke and we cannot simply just keep expecting the tax-payer to pick up the bill.
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Darryl Dhoffer
Founder at The Mortgage Geezer
A Mortgage Protection Fund if introduced, should only prioritise support, for lower-income families facing the greatest risk of losing their homes, and by reversing tax custs for lenders which could be funded this way, without incurring additional government debt. Reversing tax cuts is a complex political and economic issue, and may face legal challenges from the lenders, understandably, which in turn could alter lenders criteria mainstream on new borrower applications. Heed with caution!
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Akhil Mair
Director at Our Mortgage Broker
While the idea has merits in providing support to struggling families, relying solely on reversing tax cuts to banks may not be a sustainable solution in the long term.

Eligibility criteria for accessing the Mortgage Protection Fund would need careful consideration to ensure it reaches those most in need. Reversing tax cuts to banks is a complex matter that requires thorough assessment of its long-term implications.

I doubt lenders would welcome this initiative given the multitude of issues already on their plate.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
In theory this would be a useful idea and help support those that really need it. However, the issue is always with the details; how much will it cost to administer and who picks up that bill; lenders? The Department of Work and Pensions? HMRC? The next issue becomes one of rules and criteria for the support; how do you ensure that the help goes to those that are struggling due to health or work issues and not those that simply overextended themselves and bought houses and cars they really shouldn't have when money was cheap? There is a huge difference between those who genuinely cannot afford their mortgage, and those that say they can't afford their mortgage, but in reality cannot afford their lifestyle and are choosing not to change that lifestyle to prioritise the mortgage.
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Adam Smith
Founder at Alfa Mortgages
Struggling families doesnt really narrow it down these days. They would be paying off most the country.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
I'm as died in the wool a lefty as they come so you'd think I'm all for this but I'm not. Yet another party coming up with sticking plaster ideas and not addressing the elephant in the room. We need a proper long term plan to build enough housing and infrastructure - but then building in a NIMBY's back yard doesn't play well at the ballot box.
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Gary Bush
Financial Adviser at MortgageShop.com
This sounds like a potential political meddling disaster - the UK has great benefit systems in place, all that is needed is for the existing systems to be streamlined and less resistant to the population's changing needs. As the forerunner to providing social security to its citizens in times of need, since 1948, the UK just needs to be able to react better to times when budgets are being squeezed and without having to jump through too many hoops of fire to gain much-needed assistance. Creating a new system isn't required we have all the mechanics already in place for this.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
Whilst many families are definitely going to need some support to meet their increased mortgage payments following the cost of living crisis the cynic in means sees this as nothing more than headline making to generate votes whilst at the same time bashing rival leadership parties. With no clear details of how they would administer this, what funding would be avialble, who can apply, how long it would be paid for its a clear attempt at staying relavent and nothing more.
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Amit Patel
Adviser at Trinity Finance
Its a good idea on paper, but we can't expect the Government to bail out people everytime their is an economic shock, where would it end.

Protection policies will solve the majority of the issues, albeit some people may not be eligible due to a health condition or hazardous occupation.

If you get sick or injured and can't work, income protection insurance can: pay you part of your monthly income, pays out if you need to take time off work for an illness or if you’ve been injured and support your recovery and get you back to work sooner. The payout is tax-free.

It won't pay out if you're: made redundant or dismissed and still getting paid sick pay by your employer.