Its decision follows a series of moves from Lloyds Banking Group (LBG) earlier this year to discourage customers from opting for interest-only borrowing.
This spring LBG increased the cost of interest-only mortgages available through its Halifax brand, and reduced the number of acceptable repayment options on these loans, sparking speculation that other lenders would follow suit.
An estimated 1m borrowers took out interest-only mortgages between 2005 and 2009, although some experts believe the true figure is far higher.
The fear is that many borrowers may have made no repayment provision, storing up a mortgage time bomb for the future.
The Financial Services Authority, and the Ombudsman have begun putting pressure on banks and building societies to defuse the time bomb. As a result, some lenders are now trying to switch borrowers onto repayment mortgages.
Melanie Bien, a director of mortgage adviser, Private Finance, said: “Repayment mortgages offer more security than interest-only deals, but forcing everyone on to one, regardless of their circumstances, is not realistic.”