Co-operative interest only mortgage range withdrawn.
The Co-op has announced that it's interest only mortgage range is to be withdrawn as from Tuesday 08 May 2012.
New Co-op customers are to be offered capital and repayment mortgage products only. The lender points out that the product withdrawal will not affect its existing interest only customers.
Interest only deals have become highly popular in recent years, however falling property prices and interest rate uncertainty has led to a decline in demand.
The Co-op advise that under 10 per cent of its new mortgage customers now choose to take on an interest only mortgage as compared to 25 per cent in 2007.
The Co-op says that it is in full support of the proposed FSA interest only changes due to come into effect from 2013. A spokesperson advised that the Co-op expects that proposed changes will see all customers assessed on a capital and repayment loan basis. In line with the proposed changes the lender has decided from 08 May to lend only to new customers on this basis.
The Co-op says that it remains committed to its existing interest only mortgage holders, insisting that they will be able to switch to an alternative product at the same level of borrowing when their deal ends. Interest only mortgage holders with the Co-op will also be able to 'port' their mortgage should they choose to move home.
The Co-op has also entered into a communication programme to ensure all interest only mortgage customers are fully aware of all options open with regards their mortgage.
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