Precise Mortgages managing director Alan Cleary says 11 per cent of new business the firm writes is on an interest-only repayment basis, proving there is a market for these products.
Cleary told delegates at the Mortgage Business Expo that while there is still demand for interest-only products, it should be a niche area of the market.
He said: “Eleven per cent of our new business is for interest-only, so there are clients for whom we think it makes sense, but the majority should be on a capital and interest repayment basis.”
In June, Money Marketing revealed Precise was to offer its customers an interest-only option on its products.
Several lenders including Lloyds, Northern Rock and Coventry Building Society have tightened their interest-only criteria recently in anticipation of the FSA’s final mortgage market review rules.
The regulator is looking to ensure that interest-only borrowers have a repayment vehicle in place.
Emba group sales and marketing director Mike Fitzgerald says: “For some people, they are not suitable but for other people with above-average salaries, who maybe get bonus payments, interest-only mortgages are a sensible product.”