Nationwide took the decision to pull out of the interest-only market last week, and the secured loans packager anticipates this move will be followed by other lenders.
Dave Pinnington, business development director at V Loans, said that brokers who have the ability to offer secured loans as a substitute for remortgaging would see an upturn in business as clients looked for alternatives to interest-only.
“The bell is tolling for the likely end to interest-only as an alternative repayment method,” he said
“For some time now we have seen a dramatic increase in the demand for secured loans from mortgage brokers with interest-only borrowers who need to capital raise and protect their interest only mortgage at the same time.
“We are also well aware that a common practice deployed by mainstream lenders is to only approve further advance applications on the basis that all of their borrowing is converted onto a repayment basis, whilst others demand proof of repayment vehicles, even if the mortgage has been in place for years.
“As the first charge market continues to limit the options available to clients, the secured loan sector offers a real alternative for brokers and their clients.”
