Almost 136,000 interest-only mortgages are due to mature this year alone, at a value of almost £16bn, according to the study.
The subject of interest-only mortgages has been a thorny one for the industry, but it appears attempts to head-off potential future problems have worked reasonably well.
Earlier this month the Council of Mortgage Lenders (CML) said it was encouraged by the results of its enquiry into the market and it was a case of “so far, so good” on industry initiatives.
However, Shawbrook Bank’s Maeve Ward suggested more can be done to help consumers repay their debt, while the Financial Conduct Authority (FCA) has confirmed it will look at how lenders treat borrowers whose interest-only mortgages are approaching maturity.
Mortgage Solutions’ Marketwatch experts also discussed how they were advising clients with maturing interest-only mortgages, given the growing forecasts of maturing customers.
The research from CEBR and Leeds BS found that one-third (around 450,000) of the interest-only mortgage stock was set to mature by 2020.
Leeds Building Society chief commercial officer Richard Fearon said it was pleasing to see from the research that many borrowers were addressing their individual repayment strategies and that the interest-only back book was shrinking ahead of schedule.
“This is testament to the hard work of the lenders, regulators and the CML for raising awareness among borrowers of the need for them to consider how they will repay their loan at the end of the term.”
“There are circumstances during some homeowners’ lives where an interest-only mortgage product suits their needs and situation well, but these do change and there are alternative options available to borrowers should they wish to reassess their method of repayment,” he added.