Private banks could pick up interest-only clients

There are signs brokers are turning to private banks to help clients get interest-only mortgages after a clampdown by mainstream lenders in the last month.

Last week the Royal Bank of Scotland and Skipton Building Society became the latest lenders to cut back on interest-only.

Largemortgageloans.com is reporting an uplift in enquiries for interest-only at higher LTVs and expects the trend to continue.

Ian Gray, senior mortgage manager at Largemortgageloans.com, says private banks haven’t changed their stance on interest-only.

He says: “We are picking up a lot of business from brokers referring interest-only deals to us.”

Joe Cohen, director at First Action Finance, believes there will be more demand at private banks.

He says: “Private banks will always offer interest-only as they will consider pensions, savings and other assets for repayment vehicles.”

But Andrew Montlake, director at Coreco, says that private bank clients must be high net worth so demand can’t increase too much.

He says: “Customers can’t be shoe-horned into a private bank if they are not suitable.”

Meanwhile, the Council of Mortgage Lenders has hit back at the Financial Services Authority’s warnings of an interest-only time bomb, calling them exaggerated.