Nearly one in five existing mortgage customers have an interest-only mortgage and the Financial Conduct Authority (FCA) is concerned that shortfalls in repayment plans could lead to people losing their homes.
There are currently 1,600,000 full interest-only and part capital repayment mortgage accounts outstanding in the UK. They represent 17.6% of all outstanding mortgage accounts and over the next few years increasing numbers will require repayment.
In 2013, the FCA identified three residential interest-only mortgage maturity peaks.The first peak, happening now, is likely to have more modest shortfalls due to the profile of customers typically being those who are approaching retirement with higher incomes, assets and levels of forecast equity in their property at the end of term.
The next two peaks in 2027/2028 and 2032 include less affluent individuals who had higher income multiples at the point of application, greater rates of mortgages converted from repayment to interest-only and lower forecast equity levels. (Source: www.fca.org.uk/news/press-releases/fca-urges-action-on -interest-only-mortgages – 30.1.2018)
Equity Release Supermarket customers are telling our advisers:
If this sounds familiar, then we are here to help. Simply download our FREE guide to learn about the many options you have to repay your interest-only mortgage: including equity release.