One in five on interest-only last year
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One in five borrowers took out interest-only mortgages in the last year, Financial Services Authority data reveals.
The number taking out interest-only deals increased from 15% in 2008/09 to 19%.
A total of 72% of customers chose capital and interest as their mortgage repayment method up from 63% last year.
Remortgages accounted for 38% of all mortgages, dropping from 60% in the 2008/9.
While 36% were home movers, up from 23% and 22% were first-time buyers , up from 13%.
There was a total of 0.93m mortgage sales worth £123bn down from 1.2m sales worth £171bn in 2008/09.
Fixed rate mortgages accounted for 64% compared to 59% last year with 78% of first-time buyers opting for a fixed deal.
Three-quarters of mortgage lending was to borrowers requiring LTVs of less than 75%, compared to 69% last year.
For first-time buyers the figure is 48%, up from 36% in 2008/9.
Readers' comments (2)
Anonymous | 1 Sep 2010 8:25 am
How do these figures add up?? Surely a percentage increase in interest only must be at the expense of capital & interest, they can't both increase in percentage terms, unless the difference is a huge reduction in part & part, if so it would have been useful to have the whole picture, otherwise this becomes misleading as to the point they are proving!
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Liz | 1 Sep 2010 4:56 pm
it will be interesting to see how many of the 19% on interest only will find themselves in huge difficulties in a few years when they want to remortgage and find they can't afford both the inevitable interest rate hike and the fact that due to the MMR they have to switch to capital and repayment... another sector of borrowers that will be trapped...
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