My younger stepson, Alex, was looking renew his mortgage recently. He has been on a five-year deal while buying with a couple of friends.
One is now heading off into the world of fatherhood, so the remaining two have decided to carry on by themselves for a couple more years.
Why should this be of interest to you? Well, a piece on the FTAdviser website caught my eye. It said that the FCA is understood to be concerned about the levels of protection sales within the mortgage market.
It seems equally likely that some are using protection to boost profit margins when there is no other business.Apparently they have been alerted to instances of protection sales increasing when the mortgage market is quiet, but going down again when it is busy.
Some have interpreted this as a sign that brokers do not concentrate enough on protection issues when mortgage sales are good.
But it seems equally likely that some are using protection to boost profit margins when there is no other business.
Well, before coming to me for guidance, Alex and his friends decided to consult a large mortgage business.
A broker chappy visited their home and had a great matey-type chat with them.
He then came up with a proposal with one all encompassing price.
What surprised Alex was that this included life assurance, unemployment insurance and just about any other type of insurance you could think of but there was no price breakdown of each element.
When he queried this the salesman initially tried to gloss over it by claiming it was all essential. Clearly it is not – especially to young single men who own the home as tenants in common and plan to go separate ways eventually.
Alex, who is 28, was further affronted when it turned out that his life assurance was more expensive than that of his friend who rides a motorbike.
Finally he called me and I suggested he go to London & Country, which has sorted out a cheaper and more flexible loan, with everything clearly spelt out and without trying to upsell.
Protection clearly has a place when a mortgage is sold. Borrowers do need to think about how they would afford their payments if they lose their job or become too sick to work.
They need to think about how their surviving partner or spouse would pay the bills if they were to die before the loan is repaid.
But this does not excuse bundling a sale without providing a clear breakdown of the costs and an explanation as to why the insurance would be helpful.
The broker who visited Alex was part of a large operation. And if it has happened to him I think we can be pretty certain the practice is widespread.
Rising interest rates
Talking of mortgages, if you were a lender and it seemed likely that interest rate rises were on the horizon would this make you: A) More likely to undertake risky lending; or B) More cautious?
The answer of course should be A. As a lender you must always take the action that would leave any sensible person gasping in disbelief.
Hence we have seen an increase in both the numbers of interest-only and in 100 per cent mortgages.
There are suggestions that interest rates may have to rise more rapidly than previously thought.
This would make it an ideal time for banks to undertake some sub-prime lending.
If they get in trouble there are plenty of taxpayers to bail them out.
Finances in Spring
For many working in the financial industry this used to be the busiest time of year – end of tax year planning combined with Personal Equity Plan (Pep) or Individual Savings Account (Isa) season.
For journalists, it meant pages upon pages of editorial to fill between the endless advertising.
Advisers, fund managers and banks would compete to see who could keep their sales team operating closest to midnight on April 5.
Then my plan for a nice day out at the Cheltenham Festival would invariably be undermined by one chancellor or another choosing to put the Budget slap bang in the middle of the festival. How thoughtless can you get?
Well Isa specials are now smaller or, thank goodness, fail to appear at all.
More regular saving has meant the rush to beat the tax deadline is generally a less panicky affair.
As for the Budget, well this chancellor has followed Kenneth Clarke’s example and banished it to November.
Next week we are to get a spring statement, which Philip Hammond tells us will not be a major fiscal event but will have updated economic forecasts.
Time to board the train to Cheltenham or book that late skiing holiday I think.
Tony Hazell writes for the Daily Mail's Money Mail section
