Interest only mortgage deals have risen steeply on the back of Bank of England base rate rises says broker My Mortgage Direct.
Managing director Paul Hearnden says if the pattern of interest only arrangements is replicated with other brokers, there could be a major problem building up for millions of UK mortgage holders if borrowers do not consider to back their interest only deals with an alternative long term payment vehicle.
MMD says since the beginning of 2004, 35 per cent of all its clients have opted for interest only mortgage deals.
Hearnden says: “Banks and building societies may well argue that most mortgage are being written on a repayment basis, but brokers now have ewell over 50 per cent of the market. As out data shows, too many homeowners are likely to be vulnerable if their homes do not increase appropriately in value and they have no other means of clearing their debt.”