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Mortgage payback product needed to deal with huge interest-only increase

LV= group chief executive Mike Rogers has called on the life sector to relaunch a form of mortgage repayment product despite the tainted history of endowments.

Rogers told delegates there was “a real consumer need” as the firm’s research shows 42 per cent of homeowners with interest-only mortgages have no idea how they will repay the capital.

He said: “There has been a huge rise in interest-only mortgages. It goes back to the issue of not being able to sell an investment-vehicle alongside a mortgage because of a misselling scandal but you are still allowed to sell interest-only mortgages and banks are terrified of asking how you are going to pay.

“There is now £74bn in interest-only mortgages in the UK and 42 per cent of borrowers have no idea how they are going to repay the capital and have no repayment vehicle to do so.

“They could switch to repayment but consumers have got very nervous about paying more each month than they need to. I think there might be opportunities for us to repackage and provide products to tap into this real consumer need.”

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