Maligned mortgage policies shunned

Sales of endowments fell by 56% last year as home buyers abandoned the controversial policies used for repaying mortgages, according to industry figures yesterday.

The Association of British Insurers said sales of new mortgage-related endowments fell from £634m to £279m in 2000 amid concern that many existing policies will fail to repay home loans. About 3m people are believed to have policies that need "top-ups".

ABI director general Mary Francis said: "The reduced number of sales of mortgage-linked endowments last year is not surprising, given the enormous amount of publicity surrounding the endowment reprojection exercise undertaken by the insurance industry."

She insisted that on average holders of endowments were no worse off than people who took out repayment mortgages.

The Consumers' Association welcomed the collapse in endowment sales, which has seen nearly half of the former sellers quit the market over the past 12 months. "People are now a lot more wary, they understand the risks involved and there is less scope for unscrupulous agents to push endowments," said CA spokesman Mick McAteer.

Despite the drop in endowments, total sales of life, pensions and savings products grew by 5% in 2000 to reach £53bn, the ABI said. Pension sales, which have been flat in recent years, rose 8% to £1.6bn.