Clear strategies in place for interest only
Peter Williams is executive director of the Intermediary Mortgage Lenders Association
By confirming that nine in every ten interest-only (IO) borrowers have a repayment strategy in place, the FCA’s research should put an end to misguided reports of a mis-selling ‘scandal’ when the market boomed between 2002 and 2007.
Having said that, as both the Experian report for the FCA and the GfK report show, there are issues for the industry to deal with.
We would expect most lenders – including IMLA members – to have clear strategies and processes in place and the Council for Mortgage Lenders toolkit also released today is a useful industry initiative to assist that.
Our latest industry survey found that two-thirds of intermediaries see a continuing role for IO products beyond the buy-to-let arena.
While no one is expecting the 25% plus volume in previous periods as noted in the reports, for the right individual, IO mortgages are a valuable option among the range of products available – providing they consider and address the issue of repayment.
The Mortgage Market Review makes this a prerequisite for agreeing any new IO sale, but the fact the overwhelming majority of existing IO customers have a plan in place underlines how this responsibility is being taken seriously.
Any borrowers who need advice on repaying an IO mortgage should have no concerns about approaching their lender to discuss the available options.
We fully endorse industry moves to build on the proactive communications that are already in place, so customers have the maximum window to consider how best to manage their loan repayments.