Endowment gloom grows

If you thought things couldn't get much more gloomy on the endowments front, you'd be wrong. This week MPs estimated that the cost of the mortgage endowments crisis now stands at £40bn and said this figure was likely to grow between now and 2013, which is the "peak year" for 25-year policies reaching maturity.

In recent years millions of homeowners relying on endowments to pay off their mortgages have been warned that the policies are likely to fail to hit their target, leaving many people facing sizeable shortfalls.

Around 80% of the 8.5m policies are unlikely to generate enough cash to pay off the mortgage, and the average projected shortfall is £5,500, said the MPs on the Treasury select committee in their hard-hitting report.

The reason 2013 is such a crunch year is that this is the year an estimated 1.7m mortgage endowments sold in 1988 will mature.

One of the MPs' recommendations is that the "red" letters which mean there is a high risk of a shortfall should be printed in red, as happens with overdue utility bills.