The number of UK households with an interest-only mortgage has fallen dramatically since 2012, according to UK Finance.
UK finance report that there are now currently 1.7 million interest-only mortgages, a reduction of 46 per cent in the past 6 years. The value of interest-only mortgages is now c.£250 billion, a reduction of 37 per cent.
An interest-only mortgage sees monthly repayments of only the interest charges on the loan and not the original capital that was borrowed. It was a fairly popular way of financing a property purchase when interest rates were higher and when the housing marketing was experiencing strong house price growth.
Many analysts had feared that interest-only mortgages were something of a “ticking time bomb” as research and anecdotes show many people don’t have a plan to pay off the underlying debt.
As interest rates have fallen, it has become more financially affordable for people to switch to repayment mortgages to begin clearing down the original debt, as well as interest charges.
Managing Director, Hiten Ganatra: “This is positive market analysis, which shows that UK households are putting more emphasis on paying down outstanding mortgage debt.”
If you are a homeowner on an interest-only mortgage and would like to speak to a mortgage broker about switching to a competitive, repayment mortgage please get in touch with our team by calling 01908 465100.