The UK’s biggest lender HBOS is conducting investigations into the interest-only market to understand borrowers’ repayment intentions in a bid to avert a future crisis, Money Marketing understands.
It is expected that BM Solutions and Halifax customers will be quizzed about whether they have a repayment vehicle.
Last week, the FSA said that 19 per cent of all new mortgages last year were interest-only, with no evident repayment plan, which could mean over 400,000 customers in 2005 alone.
Sources say that after HBOS’s results are announced, it will decide what action, if any, to take to ensure its customers are fully aware that they need to have a plan to repay the capital.
BM Solutions director Tim Hague will only say he is aware interest-only is an issue the market needs to monitor.
In July, Britannia Building Society wrote to its interest-only customers warning about not having a repayment vehicle.
London & Country head of communications David Hollingworth says: “The newer breed like first-time buyers are using interest-only because it makes life easier.”