Research reveals fall in number of interest-only mortgages
The number of outstanding interest-only mortgages is falling, according to new research from the Council of Mortgage Lenders (CML).
The total number has fallen by over a quarter in two years – with a 16% reduction in the number of loans over the past year alone.
Natural attrition (loans maturing and repaying at the end of their term) accounts for a quarter of this reduction, with around a third being attributed to full redemption of loans not set to mature until at least 2028.
Of those loans that have matured, fewer than 16,000 have not yet been repaid.
Interest-only deals enable borrowers to pay solely the interest on their loan, subsequently paying the capital when the mortgage term ends.
There were around 2.4 million outstanding home loans of this type at the end of 2014, reports the council.
Paul Smee, director general of the CML, said: ‘The continued decline in interest-only mortgages outstanding confirms our perception that many borrowers are firmly on top of this issue, and successfully making plans to manage their loans to ensure they are not faced with a payment shortfall at maturity.’
Source - Gibson Hewitt