You are here: Home - Mortgages - First Time Buyer - News -

Rise in number of lenders offering interest-only mortgages

Written by: Owain Thomas
The number of lenders offering an interest-only option has increased by eight in just two years, indicating heightened willingness to offer this form of lending, according to Moneyfacts.

The Moneyfacts data found there were just 12 interest-only lenders in June 2013 with this rising to 25 in June 2016 and by four more in each of the last two years, to hit 33 this month.

It said with competition for business in the mortgage market high, providers have started to branch out into niche areas such as interest-only.

However, the firm noted that the sector was still a long way from its position 10 years ago when 73 lenders offered an interest-only option in June 2008.

And UK Finance figures have shown that the number of homeowners with interest-only mortgages has almost halved in six years as the regulator highlighted its concerns.

Retirement interest-only growth

However, the city regulator, the Financial Conduct Authority (FCA), has recently loosened the regulations on retirement interest-only mortgages, which is expected to see further growth with options specifically designed for borrowers who have reached later life with no means to repay the capital.

Moneyfacts spokeswoman Charlotte Nelson said: “Interest-only was almost abandoned after the financial crisis, yet the slow growth since then shows that new regulations put in place following the Mortgage Market Review have seen the fear of irresponsible lending subside.

“However, there have been warnings about interest-only mortgages, with the FCA concerned that many borrowers may not be able to repay the capital at the end of the term.

“It is therefore important to note that interest-only options are purely available to those at lower loan-to-values, and with strict regulation, borrowers must be able to prove they have a repayment strategy in place,” she added.

Read more on this topic: Guide to interest-only mortgages vs repayment mortgages

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week