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RATE CUT relief for struggling homeowners could be a short-lived boost for those risking redundancy as the economy struggles to keep its footing this year, says standalone payment protection provider

“With thousands of jobs predicted to go this year* as businesses tighten their belts in response to the credit crunch, any savings made from reduced mortgage repayments will be irrelevant to those who find themselves out of work,” says’s Shane Craig.

With some High Street retailers reporting an ongoing slump in profits**, firms across the UK are expected to cut their workforce to cope with falling consumer demand meaning that homeowners with no alternative source of funding could face the very real risk of losing their home.

“Rate cuts are understandably regarded by borrowers as cause for celebration – their biggest monthly expense may well go down meaning their disposable income looks like it’s going up – but this isn’t 2003 when low inflation and a series of rate cuts made life pretty comfortable for Britain’s homeowners.

“With the cost of everyday necessities having soared – petrol, food, gas and electricity and the pound’s weakness against the euro forcing up the cost of a European summer holiday – it would be foolhardy to interpret the latest rate cut as an excuse to relax, even a little bit,” says Craig.“

For those who have no other way of meeting their mortgage repayments if they lose their income, the sensible response to today’s rate cut would be to use the saving to pay for some form of mortgage protection.

“When times are lean and blowing cash on non-essentials seems to be out of the question, it’s tempting to use a rate cut as an excuse to splash out on a treat,” he adds. “But considering the cost could be about the same, taking out an MPPI policy is clearly a better use of the money.”

To cover monthly mortgage repayments of £800, a policy with to protect against accident, sickness and unemployment would cost just £29.60*** a figure that may have minimal impact on the household budget but could bring the priceless benefit of retaining the family home.

* The Confederation of British Industry predicts job losses in 2008 of 10,000 – 31 March 2008
** DSG International issues second profit warning in four months as profits fall at Currys and PC World – 10
April 2008
*** Monthly premium for’s Low Rate ASU policyto provide a monthly benefit of £800