The demise of interest-only mortgage lending.
Nationwide interest-only mortgages have been withdrawn and RBS has advise that they will no longer accept non-advised interest only applications.
Nationwide has said that its current interest-only mortgage customers will remain unaffected by this lending policy change. However no further borrowing will be advanced to home-owners on this basis, although they will be able to borrow funds on a repayment basis.
Interest-only became a popular around two decades ago. At its peak it made up almost a third of all mortgages that were approved as buyers were able to purchase a home with low monthly repayments.
In a decade an interest-only time bomb is predicted to explode as many took out a mortgage with no repayment plan in place and they have therefore no means to repay the capital debt.
The fact that hundreds of thousands could reach the end of their mortgage in a decade and not be able to pay of their loan, could mean that many home-owners may be forced to sell their home. This will present a problem for both property owners and lenders.
Various other lenders have also clamped down on interest-only mortgage lending, however no further lenders are predicted to withdraw completely from the market until the Mortgage Market Review.
To switch from interest only - call Deal Direct.
