Some 257k mortgage borrowers switch to interest-only or extend term to lower payments

Between July 2023 – when the Mortgage Charter was introduced – and April this year, around 257,000 people lowered their monthly mortgage payments by switching to interest-only or extending their mortgage term, data from the regulator showed.

The Financial Conduct Authority (FCA) said this accounted for around 2.9% of regulated mortgage contracts.

Just 950 term extensions have been reversed, and the regulator said this suggested that people who wanted to lower their mortgage payments were opting for interest-only payments over term extensions.

Between February and April this year, 9,395 mortgage accounts temporarily switched to interest-only payments, while over the same period, 7,072 loan terms were extended.

During the reported period, only 503 borrowers exited the temporary switch to interest-only payments earlier than agreed.

In the three months to April 2025, around 341,000 mortgage borrowers secured a new deal up to six months before their fixed rate period expired, up from 280,000 in the last three-month period.

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Meanwhile, the number of borrowers who locked in to an alternative deal after choosing a new deal up to six months before their fixed rate period ended rose from around 27,000 from November last year to January this year to around 52,000 from February to April.

The FCA data showed that 217 properties were repossessed within 12 months of missing the first payments, and this was done for customer-driven reasons, such as voluntary possessions or abandoned and vacant properties.