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Newcastle pulls out of interest-only lending

Newcastle Building Society has pulled out of interest-only lending for new borrowers.

Existing customers are unaffected by the move but those who want to borrow more money will be able to do so only on a capital and interest basis.

In a broker note published last week, the building society says: “There has been a general downward movement in the marketplace in the level of interest-only borrowing allowed by lenders, with many already having withdrawn from the market. Our move is a reflection of this to ensure we are not out of line with the rest of the sector.”

Earlier this month, NatWest and Coventry Building Society joined the growing ranks that have pulled out of interest-only lending completely.

The Co-operative Bank was the first to leave the market in May, followed in October by Nationwide. Both brands claimed their decisions were prompted by a fall in demand.

Between February and May, Santander, ING Direct, Leeds Building Society and Coventry Building Society cut their maximum LTVs from 75 per cent to 50 per cent, while Skipton Building Society cut its maximum LTV from 75 per cent to 60 per cent.

Coreco director Andrew Montlake says: “Newcastle will not be the last to pull out of interest-only.”


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