The number of interest-only mortgages fell by (13.1 per cent) in 2018 compared to the previous year, UK Finance figures published this week reveal. It means the total number of pure interest-only mortgages has now fallen by over half (54 per cent) in the past seven years, from 2.5 mil-lion in 2012 to 1.23 million in 2018. Meanwhile, the number of interest-only mortgages due to ma-ture in 2019 and 2020 fell significantly (41.9 per cent), falling from 217,000 to just 126,000.
The latest reduction follows an industry-wide commitment by regulated mortgage lenders to con-tact all interest-only borrowers with loans scheduled to mature before the end of 2020, to ensure they are on track to repay their loans or work out an alternative solution. UK Finance has also produced a consumer leaflet to raise awareness of the potential options available to interest-only borrowers, including switching to a full repayment mortgage or paying back their loan in full ahead of schedule.
The figures show that there were 360,000 partial interest-only (part and part) homeowner mort-gages outstanding at the end of 2018, 16.1 per cent fewer than in 2017 and down from 705,000 in 2012, and the number of interest-only loans set to mature by 2020 shrank by 91,000 in 2018 to just 126,000 loans, a fall of 41.9 per cent compared to 2017.
The number of outstanding interest-only mortgages appears to have more than halved in the past seven years, with UK Finance highlighting the continuing rapid contraction in the numbers that were set to end on or before 2020, the first anticipated peak in maturities.