Yorkshire reviews stance on interest-only mortgages

Yorkshire reviews stance on interest-only mortgages

Yorkshire Building Society is reviewing its stance on interest-only mortgages - four years after it stopped offering this type of deal to new borrowers.

A spokesperson for the lender said: “It is a market that we are reviewing and we are looking at our offering. We do not have any plans at the moment.”

The building society tightened its lending criteria for interest-only residential mortgages in 2012, demanding a 50 per cent deposit from new borrowers.

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Yorkshire scrapped its interest-only offering altogether in 2013 ahead of the Mortgage Market Review, which introduced tougher regulations surrounding repayment strategies.

A flood of interest-only mortgage maturities is due to take place in 2017. 

While not all lenders and brokers wanted to put a figure on expected growth, all agreed that the hundreds of thousands of interest-only maturities due over the next few years would be a “game-changer” for the industry.

The Financial Conduct Authority has highlighted 2017 to 2018 as the first year in which a large number of the interest-only mortgages sold in the 1990s and 2000s would reach maturity.

The FCA has estimated almost half of those with interest-only mortgages would not be able to repay their loan in full.

Of those, 50 per cent would have a shortfall of more than £50,000.

Anticipating potential defaults, in 2013 the FCA requested lenders to contact their customers to warn them of their upcoming repayment date.