So many disappointed homebuyers are cashing in their endowment policies as they switch to repayment mortgages that they are starting to squeeze the funds managed by Britain's biggest insurance company, Aviva.
Aviva, which trades a Norwich Union in Britain, reported yesterday that, although its sales of long-term savings grew by 13 per cent during the first half of this year, its assets under management were only £ 10 billion higher at £290 billion, while the stock market rose by some ten per cent.
Some investors in income bonds are also becoming disillusioned with the returns available at today's rates of interest.
"Five-year bonds are maturing and people are not re-investing so quickly at present yields," an Aviva spokesman said.
Overall, Aviva had a successful half-year. Worldwide operating profits were 21 per cent at £1.318 billion, fuelled by a 18 per cent increase in the contribution from from general insurance to £694 million and strong life and pensions sales in mainland Europe.
The interim dividend is raised by five per cent to 9.83p, continuing a process of gradually restoring a sharp cut in the pay-out three years ago. The shares finished with a 13p loss at 644p.
Aviva's profits from life assurance worldwide rose by five per cent to £857 million. But in the UK, its single largest market, the profit fell five per cent as sales declined to £4.2 billion from £4.3 billion in the first half of last year.
Aviva has a stated policy of focusing on profit rather than volume in the UK, and increased its margins to 3.2 per cent from three per cent by cutting commissions and concentrating on the more lucrative products.
But despite this pricing action, Aviva said it expects some margin pressure in the short term as competitors pitch for a share of a modestly growing market.
"In the past 6-12 months it has been a fairly tough market out there. It looks like being more of the same for the rest of the year," said Gary Withers, head of Aviva's UK life operations.
Last month, Prudential, Legal & General and Friends Provident all signalled weaker margins for some products.
In general insurance, which accounts for two-thirds of Aviva's profit, low claims and a clamp-down on costs helped boost the result.
Aviva said its ratio of general insurance claims to premiums improved to 95 per cent from 97 per cent in the same months last year.
The integration of its £1.1 billion acquisition of the RAC was on track. The insurer was confident of achieving cost savings of £80 million a year by next year.