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Number of interest-only products doubles since 2013

The number of interest-only mortgage products has almost doubled since May 2013 while approvals have declined, according to data collected by Moneyfacts.

In May 2013, Moneyfacts reports that there were 102 interest-only mortgage products on the market. As of May this year, this has risen to 193.

Meanwhile, figures released by the FCA and the Bank of England show that the number of approvals for interest-only products has fallen from 26,592 in Q1 2013, to 24,148 in Q4 2018.

Within this time frame, the number of approvals for overall residential mortgages grew from 183,900 to 323,700, the figures show.

Moneyfacts adds that with the loosened restrictions on lending into retirement, the number of retirement interest-only products now represents 44 of the 193 residential mortgages that have interest-only as the lone repayment vehicle.

Finance expert Darren Cook comments: “These figures suggest that although borrowers are still able to locate potential suitable interest-only mortgage products, tighter rules and stricter lending criteria following the aftermath of the financial crisis may be leading to a lack of appetite for this sector.

“For those borrowers who may have reached retirement age while on an interest-only mortgage, the FCA has loosened the regulations on retirement interest-only mortgages.

He adds that because of this, older borrowers have a “much greater choice of RIO products.”

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