YESTERDAY’S announcement that interest rates in the UK are likely to remain low well into 2016 will be welcomed by home owners and landlords with mortgages, but will it have any effect on your Home Insurance costs?
In the long term, which is where we now are with interest rates held at 0.5% since 2009, low interest rates will have an inflationary pressure on home insurance rates. The insurers cannot put cash reserves into a bank account that returns a decent growth rate with interest rates being so low.
But in the same time The Property Insurer has not seen home insurance costs go up by any significant amount. Back in 2010 when the company started the average buildings and contents insurance was around £220 per year. According to our own figures that is about the same now, or maybe even a little less at around £200.
So what has happened? I think the growth of price comparison websites and competition in the market place has resulted in price stagnation. If the big old boys dominated the market then prices for sure would have gone up. But facing stiff competition, prices have come down in real terms, in order for businesses to compete.
That means low interest rates have not had a detrimental effect on home insurance at all – mainly thanks to the competition in the market. We can all thank the Internet for that.
And in theory, when interest rates do go up, it will reduce price pressure on home insurance costs because competition will remain high and any additional earnings from better interest rates simply gives insurers a war chest to win new business.
So in my view it is win/win for interest rates. Whether they go up or down, home insurance prices will remain low due to high competition.
So how do you make sure you get the right Home Insurance at the right price? That’s easy, all you have to do is visit The Property Insurer and go through the quote process there. It will take around five minutes and then you can compare some of the best UK specialist insurers and buy instantly at any time of the day or night.
And if you have a specialist home insurance requirement, then we can help as well. Whether flood Insurance, Unoccupied Insurance, Renovation Insurance or Landlord Insurance, we can deliver any of those at the best prices possible, so why not see how much you can save now?