THE CLAMOUR FOR INTEREST-ONLY MORTGAGES RISES
IN THE LAST MONTH, SEARCHES FOR INTEREST-ONLY MORTGAGES INCREASED BY 51%, INDICATING THAT MORE BUYERS ARE EXPLORING THE PRODUCT TO EASE AFFORDABILITY ISSUES.
According to Legal & General Ignite research, which tracked interest in its mortgage research and sourcing platform.
Despite the obvious demand for interest-only loans, lenders will only consider applicants who have a solid repayment plan in place to pay off the capital at the end of the term.
Similarly, applicants are looking into shared ownership to help with affordability issues, with a third (32%) of borrowers looking into this option in the last month.
KEVIN ROBERTS, MANAGING DIRECTOR, LEGAL & GENERAL MORTGAGE SERVICES, SAID:
“As interest rates settle into a steadier groove, it is encouraging to see a steady stream of borrowers making inroads into the property market, with the number of searches made on behalf of borrowers growing month-on-month since June.
“We have seen particularly high interest in shared ownership and interest-only products, a reflection of both the recent decision to maintain the base rate and longstanding affordability concerns in the market.
“While the Bank of Family has long been a major player in the property market, our data is also a robust reminder that family support isn’t always the only pathway to homeownership.
“Notwithstanding these positive pockets of demand, the market remains a complex puzzle to navigate for advisers, borrowers, and lenders alike.
“It is important that advisers continue to work on their business, as well as within it, particularly as we continue to battle economic uncertainty.
“For borrowers, it is crucial to remember the two key benefits of seeking guidance from a qualified mortgage adviser; access to products not available on consumer comparison websites, and the expertise gained from years of practice.”
In September, ‘first-time landlord’ was the joint fourth most popular search term in the buy-to-let sector.
Buy-to-let searches remained stable, with a 1% increase from August, while’regulated buy-to-let’ searches increased by 15%.
Existing borrowers are looking to borrow more, with searches for second residential mortgages increasing by 8% in September, while searches for ‘capital-raising mortgages’ increased by 3%.