The firm says that as the FSA turns its attention to affordability and responsible lending, interest only mortgages have come back into the spotlight.
Pink Home Loans says the past five years has seen an increase in interest only mortgages due to the availability and increase in popularity of flexible mortgages, substantial increase in house prices over the past ten year and a change in lenders’ criteria.
Network services director Kay Leslie says: “During 2008 the FSA will issue Good Practice notes for lenders in respect of responsible lending policies for the interest only market. This is likely to have an impact on advisers trying to place this type of mortgage in the future. Research shows that 24 per cent of new mortgages are taken out on an interest only basis and we therefore wanted to offer our AR customers best practice tips to ensure they know how best to deal with these applications.”