I was gutted to learn about the further demise of interest-only loans, with Lloyds Banking Group’s new policy.
In an era where the affordability gap – average income to average house price – is wider than ever, removing one way of getting on the ladder seems ridiculous.
I’ve been campaigning for months to get the property market going again and promoting the industries that exist because of it.
So I’m staggered that the main money-makers in the market are prepared to shoot themselves in the foot and make it harder for consumers to get on the ladder.
I’m a great believer in interest-only loans and have used them in my 20-odd years of broking to get people started. Many of these clients now live in mansions with small LTVs as they were able to buy early and benefit from house price rises. They couldn’t afford a repayment mortgage early on and interest-only gave them a leg up.
None of my interest-only clients have been repossessed so I am happy to continue to recommend them, as property purchases are a long-term investment.
We live in an age where most of our parents own property and inheritance will be forthcoming. We are also savvy with our money.
We should be championing interest-only and creating systems to make managing mortgages easier rather than trying to get brownie points from the regulator.
Or should we be nervous that lenders know property prices are set to plummet?