Other the last few years we have seen interest only mortgages move from a mainstream to a niche product. This has been done by increasing the deposit required to access this type of lending. Earlier in the year, Abbey reduced their maximum loan to value size to 50%.
Lenders, being the way they are and fearing that they would take a dispraportionate amount of this kind of lending soon followed suit. It will be interesting to see if this happens this time.
I personally believe that whilst interest is not suitable for every client, it still does have its place - eg a client who receives a small basic but a large bonus that will be used to make overpayments on the capital element of the mortgage.
(Taken from Mortgage Strategy)
Nationwide Building Society has decided to stop offering interest-only mortgages to new borrowers.
The decision does not affect existing borrowers, who are free to port their existing interest-only mortgage if they move home.
However, existing borrowers will not be allowed to increase their borrowing on an interest-only basis.
A spokesman says: “We have decided that interest-only has become a niche product. We get few applications on an interest-only basis – less than 3 per cent – as borrowers want to certainty of a capital and interest mortgage.
“That is why we have decided to stop offering interest-only mortgages to new borrowers.”
In March, Nationwide cut its maximum LTV from 75 per cent to 50 per cent.
A number of other lenders, including Santander, ING Direct, Leeds Building Society, Nationwide Building Society and Coventry Building Society have all cut their maximum LTVs from 75 per cent to 50 per cent for interest-only lending while Skipton Building Society cut its maximum LTV from 75 per cent to 60 per cent. The Co-operative Bank has pulled out of this type of lending altogether.
Lenders, being the way they are and fearing that they would take a dispraportionate amount of this kind of lending soon followed suit. It will be interesting to see if this happens this time.
I personally believe that whilst interest is not suitable for every client, it still does have its place - eg a client who receives a small basic but a large bonus that will be used to make overpayments on the capital element of the mortgage.
(Taken from Mortgage Strategy)
Nationwide Building Society has decided to stop offering interest-only mortgages to new borrowers.
The decision does not affect existing borrowers, who are free to port their existing interest-only mortgage if they move home.
However, existing borrowers will not be allowed to increase their borrowing on an interest-only basis.
A spokesman says: “We have decided that interest-only has become a niche product. We get few applications on an interest-only basis – less than 3 per cent – as borrowers want to certainty of a capital and interest mortgage.
“That is why we have decided to stop offering interest-only mortgages to new borrowers.”
In March, Nationwide cut its maximum LTV from 75 per cent to 50 per cent.
A number of other lenders, including Santander, ING Direct, Leeds Building Society, Nationwide Building Society and Coventry Building Society have all cut their maximum LTVs from 75 per cent to 50 per cent for interest-only lending while Skipton Building Society cut its maximum LTV from 75 per cent to 60 per cent. The Co-operative Bank has pulled out of this type of lending altogether.
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