Interest only mortgages becoming more common

Fri, 22 Jun 2007

According to a recent set of figures from Paragon Mortgages, interest only mortgage loans are becoming more common, whilst the popularity of repayment mortgages tails off.

Repayment mortgages have seen a steady decline, from 70 per cent of the mortgage market in 2003, down to just 58 per cent now. Conversely, the level of interest-only loans handled by brokers has leapt, from just 11 per cent in 2003 up to 26 per cent at present.

The managing director of Paragon Mortgages, John Heron, reportedly linked the changing demographics of the mortgage market with the continued upward movement of house prices, not to mention the success and strength of the buy to let market.

Heron reportedly commented: "Interest only mortgages are ideal for buy-to-let investors who benefit by maintaining gearing and at the end of the term, have the choice to either re-finance or sell the investment property to pay back the loan ."
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