£50bn interest-only repayment boost by 2020
A third (around 450,000) of outstanding interest-only mortgages are set to mature by 2020, according to research from CEBR and Leeds Building Society.
This accounts for a huge £50bn-worth of outstanding capital.
Nearly 136,000 interest-only mortgages are set to end this year, at a value of almost £16bn, according to the study.
Chief commercial officer of the mutual, Richard Fearon, said it was pleasing that many borrowers were addressing their individual repayment strategies and that number of mortgages on an interest-only basis was shrinking ahead of schedule.
“This is testament to the hard work of the lenders, regulators and the Council of Mortgage Lenders for raising awareness among borrowers of the need for them to consider how they will repay their loan at the end of the term”, he said.
“There are circumstances during some homeowners’ lives where an interest-only mortgage product suits their needs and situation well, but these do change and there are alternative options available to borrowers should they wish to reassess their method of repayment,” he added.
Earlier this month lender trade body the Council of Mortgage Lenders (CML) said it was encouraged by the results of its enquiry into the interest-only sector and it was a case of “so far, so good” on initiatives to encourage borrowers to take control of their mortgage repayment.