Interest-Only Mortgages Are Becoming Too Niche For More Mainstream Lenders
Mainstream mortgage lender, Nationwide has announced it will soon stop offering interest-only mortgages to borrowers because that part of the market is a “niche area”.
The high street bank will stop offering interest only mortgages from 18th October, although customers who are currently on an interest-only deal with Nationwide will remain unaffected, at least until the end of their fixed rate term.
Other UK lenders have also tightened up their lending criteria on similar mortgage types amid concerns about financial stability and people not being able to pay the money back, meaning borrowers could also struggle to find similar mortgage deals elsewhere.
Interest-only mortgages allow people to only pay off the capital when the mortgage term ends, enabling them to maximise their initial borrowing capacity. Mortgage brokers have greater access to available products and can advise individual investors further.
Like many other lenders, Nationwide had already limited its interest-only mortgage lending to up to 50% of the property’s value, and it now joins the list of those to pull out of the interest-only market.
In May this year, the Co-operative Bank withdrew its entire range of products, stating house price weakness and uncertainty about the economic climate had resulted in the rapid decline in demand for interest-only loans.
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