Research Reveals Fall in Take-Up of Interest-Only Mortgages

June 20, 2018
New figures released by financial services trade body UK Finance have revealed a significant drop in the number of interest-only mortgages over the past six years.  According to the figures, there are currently 1.7 million outstanding interest-only mortgages (including partial interest-only), down 46% since 2012 when this data was first collected. The total value of the interest-only mortgage book is £250 billion, down 37% in the same period. Other key statistics include:
  • There were 1,293,000 pure interest-only homeowner mortgages outstanding at the end of 2017, a 14.9% fall over the last year.
  • There were 429,000 partial interest-only homeowner mortgages outstanding at the end of 2017, a 2.1% rise over the last year.
  • The number of interest-only loans at higher (over 75%) loan-to-values fell by 13.9% in 2017. Loans at these higher loan-to-value ratios (LTVs) now make up 13% of the total, compared to 16% in 2016 and 36% in 2012.
Separate analysis by UK Finance reveals that of the one million interest-only loans due to mature by 2020 that were live at the end of 2012, only around 200,000 now remain. Whilst making contact with borrowers who are more reluctant to engage remains a challenge, there is also evidence that lenders are seeing greater success here, and the vast majority of borrowers who do engage have repayment plans in place. UK Finance says it intends to develop new best practice for lenders in this area, to reflect the changing regulatory landscape and help the industry engage successfully with more borrowers.

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