Many more interest only mortgages are being replaced with repayment ones
June 20th, 2016
On 31st May 2016, the Council of Mortgage Lenders (CML) published the statistics regarding the amount of interest only mortgages remaining on the market. The main conclusion from the data is that the amount of outstanding interest-only mortgages has dropped by a ⅓ since they began to collection this data in 2012.
The CML confirmed that 29% of total mortgage redemptions were originally loans with terms that were not set to end until at least 2028. In a majority of cases where new loans were taken out, the new mortgage was on a wholly capital and interest repayment mortgage or a part interest only and part repayment basis at the very least. There has been a great emphasis over the past few years on the importance of having a valid repayment vehicle to pay off the capital at the end of mortgage term and this seems to be making a difference. Plus, lending criteria has become tighter since 2009 on interest only lending which could well be the reason behind these figures.