More choice for interest-only borrowers

Research fromMoneyfacts.co.ukshows that 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.

More choice for interest-only borrowers

The number of homeowners with interest-onlymortgageshas almost halved in six years, UK Fiancne has showed.

However, research fromMoneyfacts.co.ukshows that 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.

In June 2018 there were 33 lenders offering interest-only mortgages, up from four year-on-year and 11 from June 2013.

Ray Boulger, senior technical manager at John Charcol, said: “It’s been a steady but slow trendover the last two or three years.

“Although having more lenders is good, what’s equally important is the way criteria is being tweaked. For example we’ve seenmore lenders prepared to accept sale of the mortgagedpropertyas an acceptable repaymentstrategy.”

Charlotte Nelson, finance expert atMoneyfacts.co.uk, said: “This latest piece of research from Moneyfacts.co.uk shows that while the interest-only mortgage road has been and still is turbulent, there is confidence among some lenders, as the number of providers offering an interest-only option has increased to 33.

“However, the number of lenders in this sector is a long way from how things were 10 years ago, with 73 lenders having offered an interest-only option in June 2008.

“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.

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

“Entering into an interest-only mortgage today is still not completely risk-free, and borrowers will need to ensure they have the means to pay off the balance at the end of the mortgage term. If borrowers are unsure they should speak to a financial adviser about their options.”