Only 2.7% of people taking out new mortgages and 5.4% of existing borrowers have financial cover to ensure continuity of their payments if they become unemployed, research has found.
A survey commissioned by mortgage protection provider British Money backs up figures from think-tank ResPublica, which estimated around 96% of people with mortgages from UK lenders have no financial support mechanisms to pay bills in the event of a lost income.
Simon Burgess, director at British Money, commented: "I commissioned the survey in order to source a definitive figure on the extent of the protection gap - I knew it was widening, but this is grim.
"Last year over 1.26million loans were advanced to first-time buyers, those moving up the property ladder and people re-mortgaging their homes. It's frightening to think 1.2 million of these could go into arrears; this scenario must be prevented."
British Money added that, prior to the payment protection insurance mis-selling scandal, nearly 28% of homeowners with mortgages held a payment protection policy.
