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GE Money pulls out of interest-only

GE Money Home Lending has pulled out of interest-only lending due to underwriting “complexity”.

The lender pulled out of the sector, including part capital repayment and part interest-only lending, on 30 May.

Before 30 May, GE lent to 60 per cent LTV on an interest-only basis.

A spokesman says: “GE Money Home Lending updated its range on 30 May and withdrew its interest-only and part options due to the increased complexity of underwriting these types of loans.”

Last year, many lenders, like HSBC and Accord Mortgages, pulled out of interest-only lending altogether. Others restricted their offering, often to a maximum LTV of 50 or 60 per cent.

In March 2013, the FCA raised concerns about the availability of interest-only mortgages after a mass exodus of lenders from the sector over the previous year.

In May last year, the FCA published the results of its thematic review into interest-only loans and found that 90 per cent of the 2.6 million of existing interest-only mortgage customers had repayment strategies in place.

However, while the FCA said it did not think “widespread misselling” of interest-only loans had taken place, it did estimate that 48 per cent of borrowers with these types of loans will have a shortfall when their loan matures.

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