Under the terms of the new agreement, RateGuard will be recommended to clients who are unable to remortgage but want to protect themselves against the effects of future interest rate rises.
Grenville Turner, chief executive of Countrywide, said: “RateGuard presents a huge opportunity for Countrywide to help the thousands of customers ‘trapped’ on SVRs who are unable to remortgage. For years, SVR customers have felt that they only have two options: either remortgage or stay as they are and chance huge repayment increases if the Bank of England increase interest rates, but RateGuard presents a genuine alternative for those without the equity in their home to remortgage at an attractive rate.”
Chris Taylor, CEO of MarketGuard, commented: “The FSA estimates that changed lending conditions have already left in excess of two million people unable to remortgage. If interest rates start to move upwards in response to inflationary pressure this number will increase dramatically. RateGuard allows Countrywide’s consultants to protect their clients from the effects of interest rate rises by paying a monthly insurance premium, typically as little as £30 per month for 24 months’ cover based on a repayment mortgage of £100,000 and an excess of 1%.”
How RateGuard works:
- The policyholder takes out insurance at 1% or 2% above Bank base (or Libor) interest rate at the time of taking out the policy
- All eligible increases in Bank base rate / lender standard variable rate above the level insured will be automatically paid into the client’s bank account on the day of their choosing to help smooth monthly cash flow. Payments will continue no matter how high interest rates rise.
- Protection can be arranged from as little as £30 per month for 24 months cover based on a typical repayment mortgage of £100,000 and an excess of 1%.
- Clients are entitled to cancel the policy within 14 days of its being taken out.
- There are no claims procedures, no claim forms and no phone calls – claims are paid automatically with funds being transferred to the customer’s bank account a couple of days before their mortgage repayment is due.
- Prices are normally reviewed weekly but may be reviewed more frequently in line with market conditions.