The full scale of the problem will emerge when rates start to rise, but could trap over 1m mortgage borrowers, said the Financial Services Consumer Panel earlier this week.
The Association of Mortgage Intermediaries (AMI) also highlighted the plight of mortgage and property prisoners barred from the remortgage market today as lenders continue to tighten criteria.
AMI Director Robert Sinclair said the transitional arrangements in the Mortgage Market Review need to be more flexible to help vulnerable borrowers borrow 10% more if in their best interests.
“This is particularly the case for those who may have self-certified in the past, have good payment histories and have enjoyed the benefits of interest only loans. It is important that the market continues to allow such existing customers to have some flexibility, without taking on significantly greater financial exposure,” said Sinclair.
A spate of lenders have increased Standard Variable Rates in recent weeks, at the same time as many have capped Loan to Values on interest-only loans.
