The results from The Mortgage Alliance’s (TMA) October distribution indicator, follow the CML’s controversial response to the FSA’s consultation paper, where it warned that the regulator could kill of interest-only mortgages.
One of the other key points outlined in the FSA consultation paper is that borrowers have a suitable plan for repaying the capital element of the mortgage, and that lenders retain responsibility for this.
Phil Whitehouse, head of TMA, said: “It’s clear from the distribution indicator’s findings that DAs believe borrowers should ultimately be responsible for repaying any capital and it is also clearly the case that interest only remains an important element in the market for the right type of borrower.”
He added: “The bottom line is that intermediaries and their clients need choice and options on products to ensure they give and get the best advice possible. As long as there is some kind of robust capital repayment provision in place, illustrated clearly with the relevant reasons and plans, there should be no problems.”
The survey also revealed that 90% of brokers felt that it was vital to ensure that the right types of borrower have access to interest-only deals, with a further 7% stating that this was extremely important.
According to the poll, 39% of respondents believe that the mortgage market is moving away from automated processing, in favour of a more manual basis for lending and underwriting, to cope with current market conditions.
