The Times report fears of an impending house-price crash, a backlog of viewings and worries over borrowers who have stopped making repayments have thrown the mortgage market into turmoil.
Aaron Strutt, product director at Trinity Financial, told Kate Palmer of The Times: “If lenders move you on to interest-only they will either expect you to have a repayment plan in place or force you back onto repayment after a set period.”
“If you’re looking to keep your monthly repayments low, it could be a good option, because it prevents you from building up too much debt from a mortgage holiday, but not all lenders like it.”
HSBC has said it would consider interest-only for some customers coming to the end of a payment holiday who were still worried about their circumstances. Family Building Society said interest-only mortgages would be considered for up to three months. Earl Shilton Building Society said interest-only was an option while Barclays and Nationwide, are not offering interest-only to borrowers on mortgage holidays.