Relaxation of interest only mortgage lending may lead to its recovery.

Interest only mortgage lending could be helped by a relaxed view from market regulators.

According to the Council of Mortgage Lenders the tightening of interest only mortgage lending criteria was entirely understandable in view of new MMR rules proposed in December last year.

According the CML director if regulators started to adopt a relaxed approach to such deals then it could lead UK lenders to review their interest only criteria and how they restrict such products.

The CML say that a balanced view is essential with interest only as there is still a place within the UK market for appropriately sold products.

Currently interest only mortgage criteria is extremely restricted. Mortgage deals tend to be hard to achieve without a deposit of 50% and above. A repayment plan must also be in place which is deemed by the lender as adequate and suitable.

The Coventry Building Society are the latest lender to bring in a second round of interest only lending restrictions. What they will accept as an adequate repayment vehicle has been greatly reduced.

The majority of UK lenders have set their loan to value levels at a maximum of 50% and restricted what is considered as an acceptable repayment strategy, therefore unless the MMR adopt a different approach it is likely to become a niche product.

There remains place in the market for interest only lending but until the MMR changes its attitude, finding a deal could be a challenge.

If you are looking for an interest only mortgage then building societies seem to offer more flexibility, however smaller lenders tend to struggle to complete with the larger high street lenders on rates.

Deals are still available but you may need professional guidance to source the best offer.

Contact Deal Direct for a mortgage quote.