Mortgage cover to cost even more

Nationwide has surprised critics by increasing the cost of its mortgage payment protection insurance (MPPI) amid widespread concern about the profit margins on this product, writes Miles Brignall.

Jobs & Money recently highlighted the 70% margins that banks are earning on payment protection policies, which are also hemmed in with restrictions on claiming. Most consumers can reduce their premiums by a third by avoiding the high street banks.

Last Thursday Nationwide upped its MPPI premiums by an average of 8% - 12 months cover for accident, sickness and unemployment now costs £5.39 a month for each £100 of cover. The premium has risen from £4.99.

Nationwide customers who take out the same cover for two years will in future pay £6.47 a month - up from the old monthly premium of £5.99.

Most people who buy MPPI cover will be far better off if they take cover from one of the specialist providers. A recent survey by Goodfellows suggested that Britons are collectively overspending £7bn by not shopping around for MPPI cover.

Its own Mortgagesafetynet accident, sickness and unemployment package currently costs £3.95 per £100 of monthly benefit compared with an average £5.78 from high street sources.