The lender said that despite interest-only mortgages being suitable for first-time buyers to overcome affordability and monthly payment hurdles, there was a noticeable gap in their distribution.
Across the whole UK intermediary market, less than 0.5% of first-time buyer mortgages were interest-only or part and part.
Interest-only products underutilised by brokerages
Gen H’s research was based on analysis of the top 100 first-time buyer brokerages by their 2025 volume.
Some 47% of these firms wrote zero interest-only business.
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Of the 53 brokerages that did write any interest-only business, it only comprised a median value of 0.25% of their FTB volumes.
Of all first-time buyer business, only seven firms’ business value attributed more than 1% to interest-only business.
Directly authorised (DA) brokerages were twice as likely as authorised representatives (ARs) to use interest-only products with first-time buyers.
The FCA’s feedback statement from December 2025 found since 2013, sales of any form of interest-only product to first-time buyers have stayed below 0.5% of all sales.
Richard Merrett, managing director of Alexander Hall, said: “Interest-only mortgages have been saddled by stigma since the financial crash, and I can appreciate how the intermediary market approaches these products with great care.
“But today’s regulatory environment is materially different; lenders use much stricter criteria and brokers are required to demonstrate suitability as they advise their clients. It’s time to revisit the interest-only structure with a view to resolving the abiding affordability challenges that so many aspiring homeowners face.
“Brokers don’t typically recommend interest-only solely because the customer doesn’t want to pay capital off – it is more about structuring the monthly payment to fit their budget. This might be to suit income structure, for example, if they receive an annual bonus, or because they are deferring making capital reductions whilst they spend money on the home or other immediate priorities.”
Sara Palmer, sales and distribution director at Gen H, said: “These are mortgages that are fine-tuned to the borrower with the help of their broker. These are clients that brokers weren’t previously able to support.
“In targeting affordability constraints or helping keep monthly payments lower, interest-only products can create truly incremental homeowners – and we’re on a mission to help the intermediary market get comfortable and confident advising on these underutilised products.”
