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Coventry Building Society withdraws interest-only mortgages

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Coventry Building Society has announced it will no longer offer interest-only residential mortgages to new borrowers from Monday.

The mutual has taken the decision to withdraw from the market for residential deals, but will continue to offer interest-only buy-to-let products.

Colin Franklin, sales and marketing director at Coventry Building Society, said that the decision had been made due to a decrease in new interest-only applications.

“Residential interest-only mortgages have declined to less than 2% of all residential mortgage applications.

“We have therefore decided the time is right to leave this market.”

The lender said that existing borrowers on interest-only will not be able to increase their borrowing on an interest-only basis, but the option to port their existing mortgage will remain in place.

Coventry’s decision follows the withdrawal of NatWest and RBS from the interest-only market earlier this week. Fellow mutual Nationwide stopped accepting new interest-only applications in October.

However, Abbey for Intermediaries announced a relaxation of its interest-only policies last week with the launch of a part-interest-only, part-repayment mortgage.

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