There has been a noticeable decrease in the number of interest only mortgages being obtained by our clients that seems to be echoed by the figures nationally.
While Interest only mortgages can offer buyers a lower mortgage payment each month it seems the fear of being unable to pay back the capital loan at the end of the mortgage is putting off most buyers. There could be a number of reasons for this but it could be that most buyers are just a little wary of taking too many risks with their assets.
Warnings that interest-only mortgages are a “ticking time bomb” appear to be filtering through to the market, with figures out yesterday showing a 16 per cent drop in the number of such loans outstanding. A quarter of the reduction is the result of loans reaching maturity and being redeemed while a further 40 per cent is down to proactive borrowers paying back their loan before it matures, the Council of Mortgage Lenders (CML) said. Just one per cent of first-time buyers took out an interest-only loan in the past year.