She said property investor clients often opted for the interest-only mortgages to improve cash flow, but that there was also a trend of more residential mortgage customers enquiring about the interest-only option.
Steve Bassi, principal at SPB Mortgages, thought more lenders were allowing interest-only mortgages now than there were two to three years ago, but were only doing so with certain conditions attached.
He said: “Normally there is a minimum income requirement, typically above £75,000 plus, and always a minimum equity requirement of about £150,000 plus.
“Yes, there has been a small rise but only in ‘appropriate’ cases. You might call it a ‘high net worth’ product, and the compliance and regulation around them are very stringent so it certainly is nothing like the crazy lending pre-crash in 2007-08.”
Both Jane King, mortgage adviser at Ash-Ridge Private Finance, and Martin Stewart, director at The Money Group, thought the rise in interest-only mortgages was more of a geographical rise due to the high property prices in London and the South East.
Ms King said: “In London and the South East, a lot of clients have large bonuses and understand the risk of interest-only, but there has been an increase overall in requests for this type of mortgage this year.”
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