According to the latest UK Finance figures, there were 702,000 pure interest-only homeowner mortgages outstanding at the end of 2022, which is 6.9 per cent lower than 2021.

However, Mortgage Charter measures, which allow a customer to temporarily switch to interest-only payments for six months could be leading to heightened interest.

A survey earlier this year found that 40 per cent of mortgage advisers had seen an increase in interest-only mortgages.

Indeed, Kate Davies, executive director at Intermediary Mortgage Lenders Association (IMLA), has said that higher interest rates and cost of living has bolstered interest in interest-only arrangements, but has urged caution.

Adding to this note of caution, the Bank of England has warned that extending mortgage terms and switching to interest-only could heighten debt burdens in the long term.

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This month Mortgage Solutions is asking brokers whether they have seen an increase in customers opting for interest-only mortgages in the last year.

 

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