Precise Mortgages has decided to stop offering an interest-only option on its homeowner range due to low take-up.
The intermediary-only lender continues to offer an interest-only option on its buy-to-let and bridging ranges.
Precise says only 3 per cent of new business in its homeowner range is on an interest-only basis, and as a result it felt offering an interest-only option on its homeowner range was not “commercially viable”.
Precise managing director Alan Cleary says: “While interest-only mortgage loans are suitable for some borrowers, it is not our target market and the low take-up of this option confirms that.”
Perception Finance managing director David Sheppard says his firm has also seen a decline in the volume of interest-only business this year, with just 9 per cent of deals arranged on an interest-only basis so far this year.
He says: “I am not sure interest-only is something that appeals to many people nowadays. There are certain circumstances when it is a useful option, such as those on a lower basic salary who are expecting an end of year bonus. For that reason I hope not all lenders pull out of this sector but it is certainly a market in decline.”