Rise in number of lenders offering interest-only mortgages
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.