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Brokers struggle to offer interest-only to first-timers

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  • 21/06/2012
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Brokers struggle to offer interest-only to first-timers
The vast majority of brokers are still struggling to offer interest-only mortgages to first-time buyers, according to the latest Mortgage Solutions poll.

A report from the Council of Mortgage Lenders (CML) said only 2% of first-time buyers took out an interest-only mortgage.

To find out if brokers were a better prospect for first-time buyers keen to borrow interest-only, enlisting better market knowledge, our broker poll found 20% of brokers placed one interest-only case for a first-time buyer last month.

A further 12% of respondents said they had completed between one and three interest-only deals and 8% completed more than three, suggesting brokers are successfully navigating the market, such as it is.

Steve Biggs, managing director at APH mortgages, said: “The only possibility for change would be if the FSA tells lenders to stop misinterpreting their rules and start lending again.

“Until then the lack of movement will remain, and it is consistent across the whole industry, both via intermediaries and direct.

“At the moment, lenders won’t lend and FTBs don’t have the level of deposit needed to get an interest-only mortgage. The lending criteria remains too tight and we don’t expect anything to change.”

Kevin Banting, adviser at Oak Grange, added: “We would always recommend that first-time buyers took out a repayment mortgage, in this market especially it would be very difficult to place an interest-only mortgage anyway.”

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