Mortgage shortfall may hit £100bn

MAKING up the average endowment mortgage shortfall will cost homebuyers more than £100 a month, according to the first detailed independent analysis of the crisis.

Leading life insurance analyst Cazalet Consulting reckons that the bill for mortgage shortfalls caused by poorly performing endowment policies will be £70bn to £100bn.

The cost, which company founder Ned Cazalet expects to be borne chiefly by homeowners, will peak in a decade, when the majority of mortgages linked to endowments are due to be paid.

The number of shortfalls will escalate rapidly from 2003, when fewer than 50,000 policyholders will be hit, to 2012 or 2013 when the number could top a million a year.

Cazalet warns that too little is being done and that the shortfalls will have massive repercussions that lenders, insurers and the Government have yet to grasp.

'Whatever the final level of total shortfall, it is simply too big a number to slip unnoticed through the digestive tract of the UK economy,' he said.