IOM: No loss of interest – but numbers are falling
Twelve months ago the lending industry’s committed to contacting every borrower with an interest-only mortgage due to mature before the end of 2020.
And CML data revealed that the number of outstanding interest-only mortgages had declined by 12% since the initiative was launched
The CML said: “Lenders agreed with the Financial Conduct Authority a broad strategy of contacting every interest-only borrower with a mortgage maturing in the next 6 years and, in the year since then, they have used a variety of means – letters, telephone contact, online information and some face-to-face communications – to encourage customers to take positive action to manage their interest-only mortgages.
“The positive outcome of this work is shown by the results of a survey we undertook at the end of last year, representing around 96% of the market.
“It showed that the number of pure interest-only mortgages outstanding had fallen by 300,000 to an estimated 2.2 million – or by 12% – since 2012.
“Over the same period, the number of part interest-only, part repayment mortgages also fell by around 90,000 to 620,000 (or by 13%).”
The data also shows that the loan-to-value profile of outstanding interest-only mortgages has also improved.
Two-thirds of outstanding interest-only mortgages have LTV ratios below 75%, and the vast majority of these are not due to mature until after 2020.