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Interest-only mortgages fall, research shows
3 December 2008 16:33
The number of interest-only mortgages being taken out in the UK has fallen, according to new research.
An investigation by buy-to-let specialists Paragon found that interest-only home purchase loans accounted for just 23 per cent of mortgage deals in the third quarter of 2008.
This is in contrast to the first quarter, where 26 per cent of all mortgages were on an interest-only basis.
John Heron, managing director of Paragon Mortgages, said that some financial firms had been especially cautious over the last 12 months, particularly when it came to lending on an interest-only basis.
He added that while many fixed-rate borrowers would have inevitably been disappointed at last months extensive Bank of England cut, they at least had the protection of a secured rate.
Mr Heron concluded that judging from the company's investigation, there were advantages and disadvantages to all mortgage products.
The Bank's monetary policy committee is due to make its base lending rate decision tomorrow (December 4th).
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