Mortgage News
GE scraps interest only after rules become ‘too complex’
Specialist lender GE Money has withdrawn its interest-only mortgage range due to the additional underwriting considerations of the product type.
A spokesman from GE said: “GE Money Home Lending is […] withdrawing its interest only and part-and-part options due to the increased complexity of underwriting these types of loans.”
The range, which was discontinued on 30 May, was available for mortgages up to 60% loan-to-value.
The Mortgage Market Review rules in October 2012 confirmed interest-only mortgages could only be offered where a credible repayment strategy was in place which prompted a wave of mortgage lenders to exit interest-only entirely.
Nationwide stopped accepting new interest-only applications within the same month followed by other major lenders including NatWest, RBS, Coventry Building Society and Newcastle Building Society.
The exodus continued into 2013 when Precise Mortgages pulled out of the market in September citing a lack of demand for the product.
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And in November Virgin Money moved to restrict its interest-only range to high-net worth individuals who must earn a minimum gross income of £100,000 with and have a property worth at least £500,000.
Clydesdale was the first lender to buck the trend in 2014 by increasing its interest-only loan-to-values from 50% to 75% for applicants with at least £300,000 of equity, exclusively through brokers.