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March 17, 2008    

Government investigates house price insurance

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by Gill Montia

Last week saw the publication of the Housing Finance Review, in which the Government suggests that homeowners may be able to insure themselves against a fall in the value of their property.

The Treasury is investigating the possibility of developing insurance that is based on house price movements.

Using a house price index, it would pay out if the value of a home declined by more than the value of an equivalent property.

The new type of policy would make use of data from the Land Registry, which includes figures at national, regional, county and London borough level.

However, to gain consumer confidence the index would need to be sufficiently local to convince homeowners that the policy offers protection based on house prices in their area.

Meanwhile, MarketGuard has announced that it will launch the first interest-rate insurance product this year.

It will cover homeowners against increases in their mortgage payments as a result of rises in the Bank of England’s base rate.

Commenting on the new product, David Hollingworth, of mortgage brokers London & County, said: “For anyone worried about rising rates, going with a fixed-rate mortgage is the best insurance policy.”

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