At the end of last year, there were 702,000 pure interest-only mortgages, a drop of 6.9 per cent on 2021. The number of partial interest-only mortgages came to 222,000, 11.9 per cent fewer than 2021.
In total, the interest-only mortgage stock, including part-and-part mortgages, has fallen by 71 per cent in number since 2012 and contracted 56 per cent in value. The value of interest-only mortgages now stands at £176bn, comprising £134bn of pure interest-only mortgages and £42bn of partial deals.
A notable decline in interest-only mortgages at higher loan to value (LTV) tiers of 75 per cent LTV or higher was seen in 2022, when the number dropped by a third to 34,000.
The share of interest-only deals at LTVs between 50 and 75 per cent also contracted by a third to 128,000.
Interest-only mortgages at high LTVs now account for five per cent of the overall stock, compared to seven per cent in 2021 and 36 per cent in 2012.
The number of interest-only mortgages which are expected to mature by 2027 also fell by 73,000 last year to 261,000. This represented a 21.9 per cent decline and amounts to a value of £37bn.
A total of 637,000 mortgages worth £135bn which are expected to mature in 2028 and beyond.
Some 27,000 interest-only mortgages had expired as of the end of 2022, at a value of £4bn.
Borrowers still paying down loans
Charles Roe, director of mortgages at UK Finance, said: “Even as cost-of-living and rate pressures built through 2022, interest-only mortgage customers continued to repay their loans, many well ahead of the scheduled maturity date.
“In total the interest-only stock, which numbered over three million mortgages 10 years ago, is now a little over one quarter of that size. Lenders continue to refine their targeted programmes to reach out to their interest-only customers, yielding positive results in ensuring borrowers are on track to repay.”
He added: “The small number of borrowers who do not repay immediately upon maturity remains very low, and data indicate the vast majority of these do in fact repay in full over the first few months following the end of term.
“As always, any customers worried about repaying their mortgage should contact their lenders early, who stand ready to help with a range of options to repay.”
